Term whole and universal life insurance are the the types of policies you are most likely to encounter when you set out to get quotes or, in general, examine life insurance policies.
There are, however other types that not many people know much about.
This may be because the companies or the agents themselves just haven’t taken the time to promote them much, or perhaps, the agents are not qualified to market some of them.
The other policies I refer to are the graded premium life policies, the variable life and the variable universal life policies.
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Term Whole And Universal Life Insurance
- Term Insurance
Term policies come in many forms. Available to you are the 5 year, 10 year, 15 year, 20 year, 25 year, 30 year and term to age 65 plans. The one you choose would depend on how long you want to keep the protection.
The time depends on whether you are single, married, whether you have dependent children or not. You may want to think about whether you have a dependent spouse as well.
Business people buy term insurance as well, whether we are talking about a business partnership, a sole proprietorship, an s corporation, a c corporation or a limited liability company.
- Whole Life
When deciding between term whole and universal life or any of the other types you may want to know which is the most popular with the consumer.
The whole life policy is the most bought policy. Actually, the consumer prefers modified whole life policies or may be the non participating straight life policy as it costs less than the participating plan.
People like the idea that this policy lasts until they die even if death occurs at age 100. Another thing to keep in mind is that term policies don’t last very long.
Why! I will tell you why. Apart from the fact that term policies are designed to last for a limited period of time these policies tend to be the first thing people drop when they have financial problems.
There is no cash value and the feeling is that they can always get another one. They pay very little attention to the fact that when they are ready to replace the policy it will cost more as this person is now older.
There may also be the problem that the purchaser may not be in as good a physical condition as when the policy was initially purchased. This would result in a higher premium. The new policy may be rated, that means additional cost, or it may be declined by the company.
Whole life has a cash surrender policy, or a loan value.
- Universal Life
Although this type of insurance is term based it does have a savings element attached, thus it is similar in many ways to the whole life policy.
- Other Types
Term whole and universal life policies are most purchased so most people have some idea how they work but what of graded premium, variable life and variable universal life.
Graded premium life is simply a whole life policy with an initial premium a little more than half the cost of the regular whole life plan at the age of purchase.
The premiums increase uniformly for a specific period, 5 or 10 years, then levels off at a little more than they would be had the premium cost been level from the beginning.
Variable universal life is permanent life insurance based and also includes an investment portfolio, like a mutual fund.
Variable life insurance is whole life based and also has investments attached. A special license is needed to sell these policies.
Term, whole and universal life insurance sell more than any of the other policies. The permanent policies are bought more though.