There are
many types of life insurance. It’s important that
you know all of your options before choosing which policy
to go with. You should always pick the type of insurance
that best fits your needs.
Life
insurance is divided into two parts: Whole Life
and Term Life.
Whole Life Insurance is life insurance
for the entire life of the individual. The longer you
pay into this type of policy, the more the value increases.
Par whole life coverage generates dividends that are
a partial return of the premium paid for coverage and
investment growth. The amount of dividends changes annually.
Non-par whole life insurance policies offer no dividends.
The future cash values in these cases are guaranteed
not projected.
Whole life-quick pay premium policies
are also available. These have a fixed premium that
one has to pay for a short interval of time until the
time it is entirely paid up. The death benefit in this
policy is leveled and paid up at the time the premium
ceases.
Universal
life insurance policies are for people who require
life insurance, have a big marginal tax bracket, have
big RRSP and pension contributions, are paying a good
tax on investment income, want to have an additional
future income and have an investment prospect for at
least 10 years. These policies are considered to be
most difficult of all
insurance contracts.
Anyone can opt for a term life
insurance. This type of policy is basically meant to
cover a person’s short term requirements. For
instance if the policyholder unfortunately meets with
a grave accident, he can claim for the insurance amount.
It also compensates beneficiaries in the case of death
of a family member. It helps in covering potential need
for life insurance in the short run.
Term
life insurance is usually a renewable and convertible
program. It ranges from one to one hundred years. If
it is a one year program then the cost of its coverage
increases every year until the time it expires. Generally
it expires at the age of 75. If the policy is term to
the age of 100 along with cash value it subsequently
becomes a part of the a whole life insurance policy.
If you opt for the Term 100 policy, it is probably cheaper
to buy a whole life insurance policy
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