The Different Types of Life Insurance

Getting life insurance is essential if you want to be sure your loved ones and financial interests are covered. Although many young people do not need life insurance, the urgency of maintaining your own policy inevitably rises as you age. It's not unusual for people to amass considerable assets heading into their 50s and 60s, and that means you simply need to account for such moneys in the event of your untimely passing. The good news is that the insurance industry has devised several ways to cover the bases with a reasonable policy, giving you many options to choose from.

Term life insurance is one of the most common, and with good reason. Unlike the broad suite of permanent life insurance types, term insurance allows you to maintain far more flexibility in your finances. If you have ever wondered what the difference is, the name says it all: term life insurance is designed to last for only a set period of time. There are a number of advantages associated with this approach, principal among them that it tends to be cheaper than its longer-lasting counterpart. You may also believe your worth or debts will change after a given period of time – again, term life insurance allows you to cap that financial relationship wherever you see fit.

Permanent life insurance comes in a variety of types, from whole and universal to so-called survivorship insurance. The most pressing question when determining which type to get may be how you want your money to be invested and used over the length of that policy. Whole life is generally considered the more conservative type, as it maintains a fixed premium rate and involves considerable investments that may or may not be returned to the policy holder in the form of a dividend. All the expenses are fixed, of course, but you may say larger dividends than expected depending on the markets.

Universal life insurance works somewhat differently. Instead of flat premiums, you get to choose how much money you put into the investment arm of that policy. Although the carrier still determines when and how to invest the moneys, you can expect higher yield options to pay more in a bull market. Many such policies also include a provision that lets you apply your accumulated cash account against your annual premiums – a boon if you want your money to start working for you.

Each of the major permanent life insurance types allows for so-called "variable" iterations as well. For the most part, these offer greater flexibility in terms of the investment decisions that may grow or shrink your account. Savvy investors and anyone who likes to play the market may find more satisfaction and financial benefit in these fluid and adaptive policies.

No matter what type of life insurance you choose, the important thing is to provide for the people you will leave behind. Shop around for different estimates and be sure and ask questions about any fine print you may have missed. The devil is often in the details when it comes to insurance.

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