Life Insurance Comparison
With so many different types of life insurance on the market, people often have trouble distinguishing between alternate policies. The easiest way to get your head around the confusion that surrounds life insurance (insurance64.co.uk/life/general-life-insurance/) is to categorise different kinds of policies based on their fundamental differences. Life-based insurance, much like liability insurance (Haftpflichtversicherung) , can be categorised in a couple of different ways, with the most simple way dividing policies according to how they were designed; as either protection based policies or investment based policies.
Pure protection policies are what most people recognise as traditional life insurance, and are designed to provide a benefit only at the time of death, serious disease, or serious injury. Investment policies, in contrast, are designed to facilitate the growth of capital, although many also have a traditional protective element as well. Protection based policies often fall under the category of temporary insurance, of which there are a few well represented types. Temporary life insurance comes in the form of term insurance, which provide coverage for a specific time period in exchange for a premium rate. Term insurance is a pure kind of insurance that is purely protective in nature, and can not be cashed out at any time for investment purposes.
In contrast to term life insurance are a number of permanent life policies, including universal insurance, whole life insurance, limited pay insurance, retirement provisions, and endowment life insurance among others. Permanent life insurance differs from temporary insurance in a number of ways, although the most significant difference relates to how permanent policies accumulate a cash value over time. Permanent life policies remain in-line until they either pay out or expire, and can not be cancelled at any time by the insurer. There are a number of different kinds of permanent life policies on the market, with the two most popular being whole life coverage and universal life coverage.
Whole life insurance provides a guaranteed death benefit for a level premium, and accumulates a cash value over time. Universal life insurance is similar to whole life in many ways, although it offers the insured party greater flexibility in payments and the chance of a higher return. Universal life insurance still accumulates a cash value, although this value does decrease over time. While there are many types of life insurance within each of these categories, a basic understanding of these differences is important for anyone researching life insurance policies in the 21st century.