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Life Insurance Policies – What’s the Difference? The Answer is a Lot

Sometimes, the terms used in just the titling of life insurance policies can be a bit on the confusing side. As you shop for this important insurance, it is vital that you make sure that you understand clearly every term that is laid before you. We’ll begin here with the different types of policies, and what benefits and downsides they have. Knowing the types of policies, you can usually go from there to either discuss this with an agent, or do some of your own homework as to what it is you are looking for and need.Because it is the most all inclusive, we are going to begin this with Permanent Life. Under this policy, also known as whole life insurance, the insured is protected throughout their life. This type of policy is often seen as more of an investment as it also has cash surrender value. In the beginning of the policy, a percentage of the premium actually exceeds the cost of the insurance and this is applied to an account which will accrue interest, just like any other investment would. These policies are usually backed up by being able to be canceled at any time, and the cash value then returned to the insured. However, if this is not the case, then as the insured grows older, rather than grow more expensive, whole life generally uses the cash value to insure the person at a lower rate than term life would for that age.Two variations on permanent life insurance are universal and variable life. Under a universal policy, the insured can select the premium that they would like to pay and then the death benefit is adjusted accordingly. Variable life insurance, the insured can direct the cash value to higher return investments, possibly changing the ultimate death benefit if the investment does well. However, if it does not, then the benefit would drop but not usually below a guaranteed minimum.Term Life is the most often chosen form of life insurance. This is because it is generally less expensive than permanent life insurance and offers the option of being renewed or even in some cases converted to a permanent life insurance policy. However, the downside of a term life policy is that it often is just insurance. There is no investment value, and no cash value. Also, once the policy does expire, the insured may find themselves having to renew at a higher rate than before, and no benefits are paid out if the insured lives beyond the terms of the policy.For those looking into life insurance, it is always best to find an agent you can trust, to really guide you through the process and explain the terms to you in full. Both the way that each is clearly understandable and you are better able to make an informed decision on what it is you wish to utilize in your search for a life insurance policy.