Explanation of the different types of life insurance

Currently there are numerous companies that offer life insurance policies. Although the crux of politics (to ensure a safe and sound life for an individual’s survivors, as well as the individual) is not altered, companies try to differentiate themselves by making different classifications or forks.

Generally speaking, life insurance is divided into two parts.

1. Term life insurance policy: Anyone can opt for term life insurance. This type of policy is basically intended to cover a person’s short-term requirements. For example, if the insured suffers a serious accident, he can claim the amount of the insurance. But it also compensates the bereaved in the event of the death of a family member. In general, it is a policy that helps meet the potential need for short-term life insurance.

Term life insurance is typically a convertible, renewable program. It varies from one to one hundred years. If it is a one-year program, the cost of your coverage increases each year until it expires. Generally, the maturity is at the age of 75 years. Whereas if the policy has a term of up to 100 years together with the cash value, it later becomes part of the “whole life” insurance. Very often it is observed that it is cheaper to buy a whole life insurance policy than a non-cash policy in the value of the Term 100 policy.

2. Permanent life insurance: it is life insurance for the entire life of the individual. The value of this policy increases as one participates in the program. Terms like Par and Non-Par are used extensively in this context. The lifetime coverage generates dividends that are a partial return on the premium paid for the coverage and the growth of the investment. The amount of dividends keeps changing annually. On the other hand, non-par whole life insurance policies do not offer dividends. The future cash values ​​in these cases are not projected but insured or guaranteed.

o In addition to all this, quick pay lifetime premium policies are also available. In these there is a fixed premium that one has to pay to quit smoking in a short period of time until the moment it is paid in full. The death benefit in this policy is leveled and paid the moment the premium ceases.

o The whole life insurance policy can also be fractured in terms of premium payable for 15 years, 20 years and 65 years of age. The terms and conditions in these cases remain more or less the same.

o The universal life insurance policy is intended for people who require life insurance, have a large marginal tax bracket, have a large RRSP and pension contributions, pay a good tax on investment income, want to have an income additional future and have an investment outlook for at least 10 years. These policies are considered the most difficult of all insurance contracts.