Types of Life Insurance

Types of Life Insurance

Two categories of life insurance are available to consumers: term and permanent. Term life insurance covers an individual for a specific period of time and will pay a stated death benefit to beneficiaries only if the insured dies during the length of the contract. Term life insurance policies have no cash value; the whole of premiums paid is dedicated to paying for the insurance coverage.

Permanent life insurance includes whole life, universal and variable policies. Each of these policies will cover an insured until death occurs provided premiums are paid and policy lapses are avoided. Permanent life insurance policies include a cash value in their design meaning a portion of the premiums paid to keep the policy in force will be deposited in an investment account to accrue tax-deferred interest. The remaining portion of premium payments is used to pay for the cost of insurance coverage. In the case of whole life policies, the cash value is added to the death benefit paid to beneficiaries when an insured dies.

Cost of Life Insurance

Obtaining life insurance quotation for term and permanent policies will assist a consumer in making a choice between the different policies available. A free term life insurance quote will demonstrate that term insurance is less expensive than permanent insurance alternatives because of term insurance’s lack of cash value. A free term life insurance quote can easily be obtained online or by contacting an insurance provider via telephone. Local insurance agencies will also provide a free term life insurance quote to an interested consumer.


Permanent Life Insurance Policies

Life insurance quotation for permanent policies will include the projected growth of a policy’s cash value over time. Compared to universal and variable life insurance policies, whole life policies offer the most conservative investment options for accruing cash value and will be less costly.

Cash Value and Variable Life Insurance 

Growth of cash value will be more aggressively demonstrated in a variable life insurance quote due to the different mix of investments allowed within these policies. The cost of the increased number of investment choices permitted within variable policies is higher premiums than those charged for the other types of permanent insurance.

In the contexts of accrued cash value and cost of insurance, universal life insurance policy quotes will generally fall between those provided for whole and variable policies.

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