Over the past few years, people are increasingly gaining interest in life insurance policies as their benefits continue to help a lot of folks. Most especially, it is an excellent way to protect one’s estate and ensure a comfortable life for their loved ones after their unfortunate demise.
But again, purchasing life insurance can be at times hectic. This is especially if you do not know the various types of policies involved. While most people know about whole life insurance, there are a bunch of other alternatives that people know so little about. Once you decide to buy life insurance, you need to be informed of the types and policy options available to you. With this knowledge, one can comfortably pick the most suitable option for their needs and preferences. On this note, let’s have a look at the different types of life insurance you want to know about.
1. Whole Life Insurance
Have you ever had long-term plans like having children or investing in real estate? Whole life insurance comes worthwhile in such a scenario. As described at policyadvisor.com/5-types-of-life-insurance-in-canada/, a whole life insurance policy is sometimes referred to as permanent life insurance. It is also known to accumulate a cash value over time, thus regarded as an investment. It guarantees the policyholder with full lifetime coverage for as long the policyholder pays the premiums.
Whole life insurance is usually beneficial because of its permanent characteristic since it does not expire despite being a little bit more expensive than other types. This type of insurance represents a contract between the insurance company and the policyholder in that so long as the terms are met, the insurer will pay death benefits to the policy’s beneficiaries when the policyholder dies.
2. Universal Life Insurance
This type of life insurance imitates the permanent one, only that it has an investment savings element in it. Part of the paid amount goes to savings while the other covers the life insurance. This allows the policyholder to choose how the premium is going to be shared between the two elements and within what range. This factor of flexibility in universal life insurance tends to attract many people to the policy. While most of the other insurance policies have fixed premiums, this one allows you to make choices of how your amount is going to be used between the two elements.
3. Term Life Insurance
This one guarantees the holder the payment of a certain benefit in case the policy-holder dies. The covered person and the insurance provider agree upon the period in which if the covered person dies, the insurance provider has to pay a certain amount to the beneficiaries who had been stated by the covered person. Beneficiaries range from individuals to the payment of things like healthcare costs, funeral costs, consumer debt, or mortgage debt. These are things that will be stated in the agreement signed by both the insurer and the covered person. Once the term life insurance expires, three things can happen. First, the policyholder can decide to renew it. This means making the same agreement they had made before. Second, they can allow the coverage to terminate completely, and thirdly, they may decide to convert the policy to something lengthier like permanent coverage.
4. Medically Underwritten Term Life Insurance
This is one other example of life insurance. Medical underwriting means evaluating an application for health insurance coverage and determining the eligibility of the application based on the medical history of the applicant. The term of the policy varies depending on the health condition of the applicant and the policies guiding the insurance company.
For one to be eligible, the insurance company puts the applicant’s medical history into scrutiny before determining whether to accept the application. Depending on the results of the actuarial analysis done on the medical history, the company estimates the risk associated with such coverage. Thereafter, a decision that includes the pricing is determined. Many consider it to be among the most affordable options for life insurance.
5. Simplified Issue Life Insurance
This is one of the life insurance policies whose success of the application depends on the health condition of the applicant. It is however approved with the least number of health questions. People who don’t wish to disclose a lot of information about their health or need to obtain life insurance right away can easily opt for this policy. The coverage goes for days and not weeks nor months. The pricing is very high since the insurance company cannot factor in the underlying health issues since there are no many questions asked. The risk is considered very high and hence the high pricing for the premium coverage.
As we have established, there are several life insurance policy options out there to choose from. You just need to be informed about what will work for you before choosing one. The above piece will hopefully make your life insurance purchase process a breeze.