Are there major types of life insurance available?

In the United States market there are two basic types of life insurance: term life insurance and life insurance (whole life insurance.) The latter is divided into several categories, which would be insurance. of traditional permanent life, variable life insurance and universal life insurance In 2003 there were 6.4 million individual term life insurance policies, while of permanent type came to about 7.1 million policies.

And as you can imagine, individual insurance policies are different from insurance policies sold in groups or groups. Here, an explanation of the two basic types of individual life insurance.

Term life insurance
This type of insurance is the simplest of life insurance. The policy makes a payment when the insured person dies during the time or term of validity of the policy, which can go from 1 to 30 years. Most term insurance does not include other payment provisions.

There are two different ways to purchase term life insurance: level term life insurance and decreasing term insurance.

Level term life insurance: means that death benefits remain the same during the term of the policy.
Declining term life insurance: implies that death benefits vary and decrease with the passing of the policy years, usually at one year intervals until the end of the policy.
In 2003, almost all term policies (97% of them) were level-type policies, that is, the benefits did not decrease with the passage of time in the policy.

There is more detailed information that you can see in the article The different types of term policies.

Permanent life insurance
Permanent life insurance pays benefits in the event of death, no matter how old the insured person lives, even if he or she lives to live 100 years. There are three basic types of this insurance and each of them has its variations.

Permanent life insurance
Permanent life insurance pays benefits in the event of death, no matter how old the insured person lives, even if he or she lives to live 100 years. There are three basic types of this insurance and each of them has its variations.

Traditional permanent life insurance: the coverage of this insurance, that is, the amount of the benefits payable after the death of the insured, and the price or amount of the monthly premium remains level, that is, it will not change during the period that the policy is current.
The cost of the policy is calculated depending on the insured amount: for every thousand dollars of coverage there will be an X amount to pay for the premium. The cost per thousand dollars of coverage increases with the age of the insured person and obviously the coverage of a person who exceeds 80 years of age can become very expensive.

The insurance company may decide to charge a monthly or annual policy that varies each year, but this would be very difficult for most people to maintain, so they average the cost of the premiums and charge the same price from the beginning of the year. the coverage. Thus, the coverage premiums will be the same from the beginning to the end of the policy. The initial premiums will be more expensive than what is required to cover the cost of the policy, so the insurer will invest that superfluous amount in a way that generates profits that will be used to supplement the premium payments when the insured is larger and the premiums would be more expensive than what is paid monthly.

By law, when these “overpayments” reach a certain amount, they must be made available to the owners of the policy as cash, which is known as an accumulated value (cash value), in the event that the insured decides that does not want to continue with the original plan. This accumulated value is an alternative benefit, not an additional benefit of the policy. That is, the owner of the policy may perceive it as an option, but it is not added to the indemnity value payable to its beneficiaries in the event of the death of the insured.

Variable life insurance and universal life insurance: In the decades of the 70s and the 80s, these two additional types of permanent insurance were introduced to the market. There is more detailed information that you can see in the article

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