If you’ve made the choice to purchase life coverage, it’s helpful to know a bit about the various types of whole life insurance available. Whole life policies are designed to offer permanent life coverage for your entire life. This type of policy can be used to pay estate taxes, as well as provide funding for college expenses and other personal expenses. There are several types of whole life insurance available, which include standard, variable, and renewable whole life policies.
Most people obtain whole life policies in order to provide income during retirement. With a whole life policy, the death benefit is paid to the surviving spouse or family member, depending on the type of agreement entered into. The most common types of whole life insurance coverage are standard, non-recourse, and cash surrender. Among the types of whole life insurance coverage, the most inexpensive is the standard policy. In addition, there are several types of joint life policies that are less expensive than a standard policy.
Non-recourse policies, also known as ” Terminal Illness Policies,” are a type of whole Life Insurance Policy that provides coverage if a person dies due to “unexpected” or “extended” illness. These policies may also pay out if the policyholder has a terminal illness and is no longer eligible for Social Security benefits. The premiums of these policies are not affected by age or current health conditions. However, they are often much less expensive than the premiums for traditional life policies.
Variable policies, as their name implies, allow the policyholder to choose from a variety of investment options. These types of whole life insurance policies allow you to adjust the amount of your payout based on the rise and fall in various investments. You will most likely want to invest in cash value policies as opposed to term life coverage as there are usually no restrictions on how long the policy can be in force. As a result, the amount of cash value you can accrue increases over time.
Another form of life coverage is term insurance policies, also called permanent insurance policies. Term life insurances provide coverage until a certain period of time called the “contestable period.” The length of time within which a policy is able to be claimed is called the “term.” Generally, term insurance provides coverage up until the age of 70.
A number of whole life policies convert into other forms. These types of policies include variable universal life (VUL) and whole life policies. Generally, both VUL and whole policies convert into cash value. With a VUL policy, the premiums are tax-deductible while with a whole life policy, the premium is paid directly to an account.
One type of life policy called the “premium rider” is included between the face amount of the policy and the death benefit. The premium rider allows you to take advantage of a lower premium if you become disabled or if you become unemployed. The disability rider will pay your beneficiaries a percentage of your lifetime benefit should you become disabled. If you become unemployed, the premium rider will become a refundable rider that will reduce the face value of your policy. Refund riders are not available for variable universal life policies.
With these different types of insurance policies, you can choose from several different payment options. Some policies allow you to make monthly payments; others allow you to make a one-time payment or a combination of monthly and one-time payments. The face amount, premium and death benefit of each policy will remain the same throughout your life time.