Two Types of Life Insurance.    by David Livingston

in Insurance / Life Annuities    (submitted 2011-10-12)

Buying insurance is usually set aside by a lot of people until they encounter someone close to them die. Procrastinating about purchasing a life assurance policy such as lifeinsurance is normal for people because of our inherent nature to avoid the topic of death. However, you should not procrastinate purchasing a lifeinsurance policy for too long since something might happen to you at any moment which might leave your family and loved ones struggling financially because of your loss.

If you know that somebody will suffer financially at your loss such as your spouse or an aging parent, then you should really consider purchasing a lifeinsurance policy to protect them. An insurance policy such as a term lifeinsurance policy is a binding contract that will provide security to your designated beneficiaries in the event of your death. A lot of people purchase lifeinsurance and designate their loved ones or family members as their beneficiaries. Some people are even eccentric enough to name their beloved pets as their beneficiaries in case they die.

There are basically two types of lifeinsurance policies to choose from. Knowing a little something about these two types of insurance will help you choose the type of insurance that is suited for you. They are as follows:

Term lifeinsurance. Term life is a lifeinsurance policy that will give insurance coverage on a person for a specific period of time. The term coverage ranges from a year to a 30 year period. Term lifeinsurance quotes will give a person the estimate on how much insurance coverage he or she is going to get from a chosen monthly premium rates. However, not everybody can avail of a term insurance policy. Insurance underwriters have the option to assess a person if he or she is a good candidate for insurance. A person will be assessed based on the risk profile of that person. This means that if a person has poor health, is already old, and/or has a very dangerous job; that person may be denied a lifeinsurance policy. A person being denied a regular term lifeinsurance policy may avail of the no medical exam lifeinsurance policy which may be significantly higher in terms of premium rates but nevertheless will offer insurance coverage to a person.

Universal lifeinsurance. Universal lifeinsurance means that your life insurance has an investment option. There are two types of Universal Life insurance. The first one is the Term 100 (T100) or Level Cost. This means that the premiums that you have to pay will remain the same for the rest of your life. This means that whatever age you turn, the cost of your premium will always remain the same. For example if you started with a policy that will require you to pay $100 per month to get you covered with life insurance; then this rate of $100 per month will remain constant for the rest of your life no matter what age you will be turning to the following years. When you stick to paying only the $100 per month for the rest of your life, you are only paying for the premium payments for having yourself insured with life insurance. The amount that you are paying does not include any amount that is put into the investment component.

The investment component of the universal life insurance comes when you add in extra investment on top of your regular premium. The advantage of using the investment component of a life assurance policy is that life insurance is always paid tax free. Even the investment and the money you put in the investment is returned to you tax free.

The second type of universal life insurance is the universal life YRT. YRT stands for Yearly Renewable Term. This means that as you grow older, your cost of insurance will go up. The monthly premium that you are paying is being split into an investment and the cost of insurance. The investment amount that you are paying will decrease as your insurance coverage is increasing. This is disadvantageous for people who will live longer because the amount of money being put into the investment option is decreasing as you get older.

About the Author

Article by David Livingston of EQuote, who is a specialist in everything life insurance. For more information on term life insurance costand online life insurance, visit his site today.