Term Life Insurance
Term life is the simplest and obviously the least expensive policy type. There is no savings account or interest bearing account, it’s just pure life insurance. A term life policy is designed to do only one thing which is to pay your heir(s) upon your passing. The term policy is designed to protect something or someone, like your family, by providing money they can nvest to replace your salary, as well as to cover final expenses incurred by your death.
Whole Life Insurance
Whole life insurance is designed to provide permanent (or whole life) protection for your dependents, and at the same time building a cash value account which can be recovered without a death, during your lifetime. This cash value account is managed by the insurance company using low risk investments and tax deferred cash value accumulation. The premiums are fixed for the life of the policy and won’t change as long as you pay the illustrated amount. Many whole life policies include a dividend option which can be either redeemed or reinvested into the policy to cover premiums or increase the death benefit.
These policies will not allow more modern, flexible investments in different kinds of self managed vehicles.
Variable Life Insurance
Variable life insurance (like whole life) also offers permanent or lifetime protection for you and is designed to offer flexible investment strategies for the more risk oriented policy holder. The death benefit of these policies often can float in relation to the returns of the cash value account, additionally one can borrow or even withdraw cash value from these policies at anytime it is feasible. Because of the flexibility of these policies there are no guarantees of performance or cash value. Still, just like whole life, the policies have fixed premiums and fixed face amounts.
Universal Life Insurance
Universal life insurance also offers its policyholders permanent protection for dependents and is even more flexible than variable life or whole life. The main differences from a variable policy is that it allows you pay any premium (or no premium in fact if the cash value allows it) you choose as well as to play with the face amount as your situation demands. Unlike a variable policy, it doesn’t allow separate investment accounts like stock or money market funds.
Variable Universal Life Insurance
Variable Universal life has the most investment options for the insured and offers the most control over the cash accounts to the insured. It offers separate investment accounts for investing in different funds, the VUL also offers premium flexibility and face amount flexibility. Borrowing or withdrawing from the cash value is also allowed as long as the cash surrender value supports it. The performance of the product is based on your account management and sound investment decisions.
Non-Medical Life Insurance
Many people would say there is barely enough time in the day to even consider a need for life insurance, let alone figure out their needs, purchase it, and then run through the necessary requirements to obtain it. Because of this, a new form of life insurance has emerged called “non-medical” life insurance, drastically reducing the amount of time it takes to obtain a life insurance policy. In fact, in most circumstances, customers are able to obtain life insurance instantly when they are shopping online. A customer is able to log on to the internet, type in the relevant information like their zip code, age, and health information, obtain a quote, and apply and get coverage instantly. While the policy is underwritten (meaning the carrier will ask for relevant health information and/or doctor records), the client is not asked to give blood, take a paramedic exam, or even submit to an oral swab test. The policy is issued quickly, if not instantly depending on age, and the customer doesn’t have to deal with the constant back and forth between the company, an agent, and themselves.
Because of the risk involved in issuing policies without vital health information obtained from tests like a paramedic exam, insurers limit the size of policies that they issue non-medical. Also, non-medical life insurance policies are usually limited to term life insurance. For the most part, companies have issued policies up to $350,000 in face value non-medical, and as more and more people look for convenience in shopping for life insurance, you can be sure insurers will continue to offer more options to choose from. So if you are in the market for life insurance and don’t have the time or patience to get tests and wait for underwriting, non-medical life insurance may be your best bet.