Life Insurance

Life insurance is basically a contract between the insurance company and an individual that bestows a payment on survivors in the event of the death of the insured. But it can be much more than that. Besides the death of the individual, benefits can also be paid for terminal illness, dismemberment, and various other circumstances. In addition, the terms of the contract can be structured in different ways. Always be sure you understand the terms of your life insurance policy and work with your life insurance agent to institute a policy that bests fits your needs.

Term Life Insurance

Perhaps the simplest of life insurance policies is Term Life Insurance. Term Life Insurance supplies benefits to designated beneficiaries within a defined time span usually ranging from one to 20 years. While often the simplest type of life insurance, terms can still vary widely. For instance, Level Term Life Insurance means you'll be paying the same premium for the same amount of coverage over the life of the contract. Term Life Insurance can be used for various purposes, such as mortgage protection, and is offered in several variations to fit certain circumstances. The major factor to remember is that Term Life Insurance is usually the least expensive and does not retain any residual value when the policy expires.

Whole Life Insurance

Whole Life Insurance is a different animal than Term Life Insurance. In general, Whole Life Insurance can be thought of as a combination of insurance and investment. In other words, over time Whole Life Insurance will provide death benefits while at the same time generating a cash value. Whole Life Insurance tends to be more costly but again the cash value may be utilized or borrowed against at some point in the term of the policy.

Universal Life Insurance

Universal Life Insurance is a variation on whole life and comes with several variations. While it does accumulate cash value, the investment side of the equation can vary widely. Some Universal Life Insurance policies will come with a minimum guaranteed return while others will be dependent on the return of defined investments.