There are numerous companies existing today that offer life
insurance policies. Though the crux of the policy (to ensure a
safe and sound life of an individual's survivors as well as to
the individual) does not alter yet companies try to differ with
each other by making different classifications or bifurcations.
Broadly the life insurance is divided into two parts.
1. Term Life Insurance Policy- 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. But it also compensates the
bereaved in the case of death of a family member. All in all it
is a policy that 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 hundred years. If it is a one
year program then the cost of its coverage increases after every
one year till the time it expires. Generally the expiry is at
the age of 75. While if the policy is term to the age of 100
along with cash value it subsequently becomes a part of the
insurance for 'whole life'. Quite often it is noticed that it is
cheaper to buy a whole life insurance policy than a non-cash one
in value Term 100 policy.
2. Permanent Life Insurance- this is life insurance for the
entire life of the individual. The value of this policy
increases throughout the time one participates in the program.
Terms such as Par and Non-Par are widely used in this context.
Par whole life coverage generates dividends that are a partial
return of the premium paid for coverage and investment growth.
The amount of dividends keeps on changing from annually. On the
other hand the non-par whole life insurance policies offer no
dividends. The future cash values in these cases are not
projected but assured or guaranteed.
* Besides this whole life-quick pay premium policies are also
available. In these there is a fixed premium that one has to pay
for quit a short interval of time till the time it is entirely
paid up. The death benefit in this policy is leveled and paid up
at the time the premium ceases.
* Whole life insurance policy can also be fractured in terms of
premium payable for 15 years, 20 years and 65 years of age. The
terms and conditions in these cases remain more or less the
same.
* Universal life insurance policy is meant for people who
require a life insurance, have a big marginal tax bracket, have
big RRSP and pension contributions, 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 the
insurance contracts.
About the author:
Mansi gupta writes about
affordable life insurance
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