Life Insurance Coverage is essentially one of the most challenging parts that any purchaser faces while choosing the right insurance plan. This is because his risk stands to gain from a very wide range of benefits that not just consolidates it but also gives him value additions much beyond the simple risk cover he is paying for.
A major decision like purchasing a life policy generally goes with some major changes in an individual's life. Life insurance coverage is sought by most people after marriage, or when other major events take place in their lives. It is possible that an individual could miss the intricacy of choosing life insurance coverage when buying his first policy in an eventful and fast changing world. However by simply knowing what coverage they need buyers can control the cost of their life insurance coverage.
Life insurance coverage is generally classified into:
Whole life insurance
Whole life insurance or permanent life insurance is coverage for life wherein the coverage never expires and would not have to be renewed. The death benefit or the amount, for which a policyholder is insured, goes to his named beneficiary after his death. This type of life insurance coverage sometimes has a ‘Cash Value' which is an added savings feature that increases the value of the policy.
Term Life Insurance
A term life policy is any life insurance coverage for a specific period of time. In the event of the policy holder's death during the term of the policy, the named beneficiary will receive the death benefit. If the policy expires during the policy holder's life time then there are no benefits or payments for anyone. Term policies offer only insurance and are quite popular because of the cost benefits they offer along with the facility to choose the amount and duration of their coverage.
Universal Life Insurance
It is a comparatively new life insurance coverage aimed at providing permanent cover that allows greater flexibility in the payment of premiums and promises a higher internal rate of return. The Universal Life Insurance policy includes a cash account where the balance increases with premium payments while the interest that is paid within the policy is credited into the account at a rate specified by the insurer.
