Life Insurance

Feedback

Feedback
Life insurance is a complex subject with many different parts. It's hard to make it simple and understandable, partly because the insurance companies that sell life insurance are always creating new variations and new products. The original intent of life insurance was that you - the policyholder - pay a premium to the insurance company, and when you die the insurance company pays a sum of money to the beneficiaries that you named in the policy. This makes life insurance unlike most other insurance, in which you pay the premium and you get the money yourself if there is a claim; in life insurance, you usually pay the premium so that others can benefit. From that original idea of life insurance lasting until you die, a second form of life insurance developed. In this type of life insurance you buy the policy for a specific length of time, and only if you die during that period is the money paid out. If you are still living at the end of the period then the coverage ends. So there are these two basic types of life insurance: the one that pays when you eventually die - whenever that happens - is called permanent life insurance, and the one that is just for a limited period is called term life insurance. That's fairly straightforward, but within these two basic categories there are further subcategories of life insurance to choose from. Under the general heading of permanent life insurance, there are whole life, universal life, and variable life. Under the heading of term life insurance, there are annual renewable term, level premium term, and decreasing term. Within these subcategories you will find even more variations, but having a basic understanding of the two main types and six subcategories will help you find your way through what can be a very confusing subject.