Life Insurance Types

It can seem confusing when buying life insurance online. There are so many new terms that it seems as if you're learning to speak a new language. That's especially true when trying to sort out the different types of insurance. There are really only three main types with a few minor variations. Any of them will have features that can suit the lifestyles of customers.

Term Life

This is the type of life insurance with the fewest extra features and also the one that is traditionally the least expensive. It pays to survivors a set amount of money in the event of the policyholder's death. If the value is $100,000, for example, then $100,000 is what is paid. Unlike other types of life insurance, term life policies have no cash value. So there is no borrowing against it if there is a need for a loan.

Whole Life

Like term life, this insurance is designed to pay a specific amount when the person named in the policy dies. In addition, the policy is also earning some cash value. The insurance company is charged with managing the accounts in which a portion of the premium is invested. The premium is a fixed amount as long as the policy is in effect. Any dividends that do occur can be paid to the policyholder or can be used to reduce the amount of payments. A person can divide the money among different accounts.

Universal Life

A universal life insurance also carries a death benefit that is paid to beneficiaries chosen by the policyholder. It also has a cash-value account feature. But it has more flexibility than the whole life policy. Market interest rates can apply to the cash value. If necessary, the purchaser can borrow money from the account while still alive. Also, there is some flexibility in the amount paid for premiums. Even the face amount of the policy can be changed. It is not allowed to invest your money in separate accounts such as stocks and bonds.

No matter which one you select, there is sure to be one that fits an individual's needs. When shopping online, the Internet can be used as a resource to answer questions about any of the types of policies. As people's lives are different, so are the accounts. But each is a solid investment to protect the futures of the policyholder and his or her beneficiaries.