Different Types of Life Insurance Policies

There are two main types of life insurance policies, namely temporary and permanent. Permanent life insurance is effective for the entire life of the insured individual, unless the individual or the owner of the policy fails to pay the premiums for some reason. In this case, the policy will naturally expire unless payment is made. The insurance agencies who offer the policies don't have the right to terminate the contract in any other case, except that of payment failure. The only other possible reason for the insurance company to terminate the contract without providing claims is when fraud is suspected. Temporary life insurance, on the other hand, is also known as term life insurance. A temporary life insurance or a term life insurance is operational only for a specified term or period, which will appear in the contract. Term life insurance policies usually only cover death, and does not include sicknesses.A term life pays out only when the insured individual dies within the specified term.

Aside from these two main types, however, there are other types that fall under them. More specifically, permanent life insurance is an umbrella term that also includes other types, namely whole life insurance and universal life insurance. Whole life insurance usually takes effect throughout the insured's entire life. However, all throughout the contract, the premium price will remain the same, and the rate of the proceeds will not change even as external conditions change. Another type is called universal life coverage, which is a new offering in the insurance market. This answers the limitations of a whole life coverage, which adds to the list of benefits premiums that can be adjusted. When you buy a universal life insurance policy, you will have better chances of gaining higher proceeds. This is generally more preferable than whole life insurance.

Aside from that, there are two more special types of permanent insurance, namely limited-pay life insurance and endowments. Limited-pay life insurance is a form of permanent life insurance wherein premiums will be distributed over the earlier part of the contract, in full, so that the contract already remains in effect permanently even without need for payments. Most limited-pay life insurance policies are paid over specific time period, ranging from 10 years, 20 years, or any length of time as long as the insured individual is not over 65 yet. The last type of permanent insurance is called the endowment policy. One commonly known characteristic of endowment policies is that they cost more in premiums annually than other types of life insurance policies. However, one good thing about endowment policies is that the proceeds are released regardless of whether the insured individual dies or not, once he reaches a certain age, or the period specified in the contract passes.

There are also other, more specific types of insurance policies that can be availed of. There is what is called accidental life insurance. As implied, this only covers instances when the insured individual dies in an accident. If the insured dies in any other way, no proceeds will be received. This insurance policy, however, is more flexible, because it is not only concerned with the death of the individual. It can also pay out in case of injury or any physical sickness caused by an accident.

Those are the most common types of life insurance policies that you can avail of.