| What Products are Sold by Life Insurance Companies |
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Life insurance can be a complicated field, so much so that people become easily confused when researching policies. However, if you break all life insurance policies down into their basic type, it is much easier to understand and compare different contracts. There are two primary ways to distinguish the policies provided by life insurance companies ; investment related policies or protection based policies, and permanent policies or temporary policies. None of these terms are mutually exclusive however, which just adds to the confusion that many people feel when they are shopping around. Life insurance contracts tend to fall into two major categories, although these categories can be further split up into multiple policy types. Protection based policies that are designed to provide a benefit in the event of a specified event, and investment contracts that can be used to facilitate growth along with their protective capacity. A common form of a protective insurance policy is term insurance, and some of the common types of investment policies include whole life, universal life, and variable life policies. The other way to split up life insurance products is by their two basic classes, temporary insurance or permanent insurance. Temporary insurance is often called term insurance, and provides life insurance coverage for a specified period of time only. In exchange for a premium, an insured party is covered for a length of time, and a death benefit is paid out if death occurs during this time. Term insurance, unlike most permanent contracts, can not be used to facilitate the growth of capital. Permanent insurance, in comparison, remains in force until a policy matures and does accumulate a cash value that is made available to the policy owner.\ The four most common types of permanent life insurance are whole life, universal life, limited pay, and endowment insurance, although these type are often known under different names around the world. Whole life insurance and universal life insurance are highly related, although universal life is designed to address a number of the inflexibilities and disadvantages of whole life contracts. Both are able to accumulate a cash value, and can be used for investment as well as protective purposes. When choosing a life insurance policy for yourself or your loved ones, it is vital to read all of the documentation, and make sure you are being covered in a way that meets your needs and expectations. |