Firstly let’s talk briefly about what life insurance is after which we shall proceed to talk about the types of life Insurance policies. It is a contract between the insurer and a policyholder in which they agree on certain amount which will be paid to the beneficiary upon the death of the insurer.
However, most people don’t like talking about “Life Insurance” because it deals with death but the truth is that it is what everybody should talk about. This is because, once a person who insured his life dies, his family will have a means of survival as they will be paid sum certain in money. As we proceed, we shall take you on the types of life insurance that we have.
TYPES OF LIFE INSURANCE POLICIES
- Indexed universal
- Variable universal
Let’s start with brief explanation of each of the types of life insurance listed above.
TERM LIFE INSURANCE POLICY
This type of life insurance policy allows insurers in groups insure their lives. Moreover, it is the most common type of life insurance policy. It is important to bring to your notice that this type of insurance policy offers as little or much period as the insurer wants. It is available for as a short period as a year and as long as 40 years.
This is one of the types of life Insurance policies which offers insurance for one’s whole life. That is why it is called “whole life”. It seems to be the opposite of term life insurance when both are compared. It remains active as long as you live and as far as you want it to be. In other words, it dies immediately you die as the beneficiaries stated by you during the insurance will begin to enjoy it.
UNIVERSAL LIFE INSURANCE POLICY
Another type is the universal insurance policy which allows insurers to make shifts on how long their insurance should be. That is, it is flexible such that the insurer can adjust the length of such insurance to his thirst. More so, some see it as the best type of life insurance policy.
INDEXED UNIVERSAL LIFE INSURANCE POLICY
This type of insurance policy is somewhat new in the system. It is also cumbersome in nature. However, such contract is based on the agreement between the parties involved. I mean, the insurer and the policyholder. It sometimes tends more cumbersome that whole insurance policy but when inwardly evaluated, it is better.
VARIABLE UNIVERSAL LIFE INSURANCE POLICY
This type forms an opinion which is similar to indexed but the truth is that they are different.
In this, an insurer is expected to make the sale of this type as a result of the risks invloved in the investment and policy. However, the growth in type of policy is tax deferred and also free from tax when accessed by loans.
This is one of the types of life insurance policies which is also called “accidental death and dismemberment”. It is payable to the beneficiary if only the death is seen to have been caused by accident. Any other cause of death apart from accident is not acceptable as the beneficiary will not be awarded any amount. In addition, the insurer approves that such be paid to the beneficiary on the ground of accident.
SURVIVOR-SHIP LIFE INSURANCE POLICY
This insurance policy is tied to two lives and not one. Unlike others, it is payable to the beneficiary when the two are deceased. It always takes the nature of universal or whole type of life insurance policy.
We shall stop here in terms of telling you what the types of life insurance policy are all about. We shall proceed to tell you some reasons why people should insure their lives.
Live insurance is not for it’s on purpose but for the purpose of another thing or other things depending on the insurer. It is important, that every member of the society insures his/her live.
REASONS WHY IT IS IMPORTANT PEOPLE INSURE THEIR LIVES
- Buy and Sale Agreement: Buy and sale agreement occurs when two persons want to decide what would be done to a business should any of them dies. It shows how a business should be handled in case one or two of the partners dies before the business is properly dissolved.
However, the decision of both parties is often dependent on the nature of the business engaged in by both parties.
- Burial Expenses: It is worthwhile to pinpoint that people make burial life insurance. It covers the final or burial expenses. Maybe they think their burial expenses might be too much on the family upon their death, so, they would have no other choice than to make such insurance
- Dept: sometimes, people die and leave their dept unpaid. This often pushes the person to whom they are indebted to take action against anyone relating to the deceased which is unlawful. Sometimes, he gets into the deceased estate or other property.
However, Life Insurance Policy gives maximum protection to those properties by paying off such dept using the death benefit.
- Business Continuation Plan: Business partners might want to continue a business even after their death. That is, they would like to transfer their assets or business to their children or to other persons. No other means of doing such other than insuring their lives.
- Divorce: Beyond reasonable doubts, divorce has been the order of the day. Hence, it’s advisable that parents insure their lives to avoid endangering their children’s lives or those under their care when they divorce. Though, some parents willingly do such probably caused by their awareness.
Conclusion on Types of Life Insurance Policies You Need to Know
In conclusion, Life Insurance itself is of great importance. Let’s not see the fact of “death” associated with it and call it evil or negative but let’s see it as worth doing.The government did not establish insurance companies any form of gain but for the good of the society.
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