Life insurance policies are used to protect loved ones in the event of your death. Once you take out a life insurance policy, you'll need to assign beneficiaries to receive monies. Your premiums for the policy will be based on your current health and age. There are various types of life insurance policies offering different levels of protection.
Term Life
A term life insurance plan is usually the least expensive and simplest type of policy. It is an insurance-only account and does not have any cash value. You will choose a set period of time (typically five to 30 years) to be covered under the policy. Only in the event of your death during this period will payment be made. Many term life policies do have renewability and conversion clauses.
Whole Life
Whole life insurance plans not only protect your dependents in case of your death but also help you build up cash value. Not only will monies be awarded upon your death, you can also receive dividends from your policy while still alive. There is typically no set term on whole life, and the policy will remain active as long as the premium payments are made each month.
Variable Life
Variable life insurance policies are plans for people who want to take more of a financial risk. This risk can reap big benefits depending on the market. The death benefit will depend on the market at the time of your demise. You will also be allowed to borrow against the policy over the course of your lifetime.
Universal Life
Universal life is the most comprehensive coverage and offers benefits to your dependents and yourself. You will have death-benefit coverage and cash value. The cash value will reflect interest earned at the current market rate. Unlike variable life, you will need to keep your money in a single account instead of the option to move it to money market and stock funds.
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