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 Life Insurance Policies

No matter how many precautions you take during your life, no one can deny the fact that death is inevitable. Sadly, even if you were born into a wealthy family of politicians and entrepreneurs, spending your whole life bustling to and fro will not save you from this unavoidable event. However, what could save you are the many different types of life insurance policies offered by insurance companies.

So long as people continue to live in a society where they expect their hard work to yield rewards or receive remuneration for their services rendered (regardless of whether they’re an artist or construction worker), life insurance policies will continue to be an important part of financial protection for everyone.

Of the many different types of life insurance plans, the ones most widely sought after are traditional life insurance policies which pay out a certain amount of money to your beneficiaries upon your death. However, there are a number of other types available which differ in terms of what they’re used for and how much they cost:

· Universal Life Insurance: These are basically traditional life insurance policies but with a few components that allow you to change some variables such as how much you will receive from your policy upon death and how long you will be paid for. However, they do come at an increased cost. Unlike traditional policies, universal policies have no expiration date and so can be kept longer.

· Whole Life Insurance: These are similar to traditional policies in that you pay a single premium but unlike traditional policies where the premium remains constant throughout, the cost of your whole life insurance policy will vary depending on how long you live or how much coverage you require. However, they are more on the expensive side and also have an expiry date. If your policy expires before death, the remaining amount is returned to you with no payout for your beneficiaries.

· Group Term Life Insurance: This type of policy differs from a regular term policy as it covers specific groups of people rather than individuals. Depending on its terms and conditions, group term life insurance covers employees either as a complement to their pension plans or as a replacement for them altogether. Their cost also varies depending on the size of the group or the amount of funds they require.

· Term Life Insurance: Unlike whole and universal policies, term life insurance policies only cover you for a certain period of time (known as a “term”). Once this period is over, the policy expires and so will any coverage. There are a number of different terms available ranging from 5 to 30 years. The shorter your term, the lower your premium costs but if you choose a longer term, your premiums will obviously be higher but so will the payout or death benefit which is given to your beneficiaries.

· Mortgage Insurance: This type of policy covers you in case you die while paying off an unpaid mortgage on a property. It ensures that your mortgage is paid off so that your beneficiaries don’t have to worry about losing your home.

· Whole Life: Contrary to the name, this term life insurance policy does not cover you for your entire life but only until the premiums become too high. After that point, it will continue either as a term plan or be cancelled altogether and its benefits will be returned to you. The payout can only be transferred to another policy after a certain amount has been paid into it (known as “units”).

· Personal Accident Insurance: This type of insurance covers you in case you become injured or ill during an accident or natural disaster. Unlike term life insurance, it covers you for the whole term of your policy. The cost of this type of policy depends on its terms and conditions.

· Accidental Death Benefit: This is a type of term life insurance policy that covers you for a number of accidental deaths during the term of your coverage. It pays a certain amount should you die from any cause other than old age or terminal illness but doesn’t cover you for any accidental death should one occur. Therefore, if you die from an accident or natural disaster without having paid into this kind of plan with your premium, no payout will be given to your beneficiaries.

· Whole Life: This type of policy is similar to term life insurance except that it covers you for the rest of your natural life should you live. However, it also means that the price of your premiums will be higher than if you had bought a regular term policy. The cost of this type of policy also depends on its terms and conditions.

· Accidental Death Benefit: As with an accidental death benefit, this type of policy covers death from any kind of sudden accident or natural disaster and therefore if you die as the result of a car crash or are injured in a landslide, your beneficiaries will receive a certain amount in damages upon your death.

· Life Income Protection Plan (LIP): This type of policy covers you in case you become disabled or die as the result of a natural disaster. It is paid for by the insurance company and lasts for a certain period of time. Unlike term life insurance, this type of policy will continue to cover you even if your premiums are no longer being paid by the insurance company. You can also leave an amount set aside for your heirs should you become disabled during the coverage period. The price of this kind of policy varies depending on its terms and conditions.

· Hospital Cash Plan (HCP): This type of medical plan covers you for a number of different hospital benefits. Depending on its terms and conditions, it will cover you for the total cost of your treatment in a hospital, for less than the total cost or even just certain specific treatments while in the hospital. The cost of this kind of policy depends on its terms and conditions.

· Critical Illness Plan (CIP): This type of policy is similar to the LIP in that it provides coverage to you if you become disabled or die as a result of a natural disaster. However, it differs when it comes to the length of time you are able to benefit from its terms. Depending on its terms and conditions, you can draw on its benefits for a particular period of time or to a certain amount. The benefits will differ depending on what kind of policy you purchase.

· Critical Illness Rider (CIR): This type of policy is an add-on to your life insurance policy that will provide coverage for specific types of “critical illnesses” even if you don’t have a pre-existing condition at the time of your application.

Conclusion

There are many different types of insurance policies available on the market today but the difference lies in what you’re looking to insure and how much you’re willing to spend. Before deciding on which type of insurance policy to buy, it is important to figure out exactly what you want protected and then work out if the cost of a certain kind of policy will cover that particular need.

When looking at the cost of each plan, do remember that it is always cheaper to pay for your life insurance policy over a number of years rather than all at once. The most important part however is to plot out exactly how much money you need in order to ensure your loved ones will be taken care of.