Life Insurance consists of two types. One is whole life insurance and another is term life insurance. Whole life insurance is to protect the entire life of a man with all benefits. It covers the entire period of policy holder until his death. Really, all benefits of whole life policy will be rendered to the person according to the value of the policy at the time of his death. Benefit value on the tax defer is also included. For whole life policy holder, dividends also will be paid.
In the case of term life insurance, the policy is only supposed to last for a specified period. If death occurs during this period, the policyholder?s beneficiaries receive the face value of the policy. If death occurs after the expiry of that period, there are no benefits. Unlike whole life insurance, term life insurance does not include a cash value or dividends.
Another major difference between whole life and term life insurance is that the premiums are usually low at the beginning of the policy and increase over time for term life insurance while those of whole life remain constant. Coverage for term life insurance is also variable from five to thirty years. If you opt for a longer term, your policy will be more expensive.
There are many agents are available to give quotations for term life insurances. Even from some websites also we can get quotations for the same. There is lot of companies competing to take lessons on quotations of the policies for the multiple agents through websites to generate their policies. Hence we can get quotations for the policies immediately also. For policy holders According to the budget and earnings of the policy holders, they can choose their monthly premiums in a term life insurance policy. Also they can switch over to whole life insurance if they are willing after a period of time.
Then there is also universal life insurance. Some companies may issue a life insurance policy without any medical examination depending upon the answers given to questions relating to the age, occupation and health of the insured. These policies are limited to lower insured values and younger applicants get the best prices.
When compared to whole life insurance, term life insurance is much cheaper. It is argued that the difference between the two is invested to make a profit for the dividends. Overall term life insurance is more profitable since it is cheaper.
The main idea behind term life insurance is to reduce financial risks for a specified period of time. The money paid in premiums is meant only for paying insurance therefore term life insurance is the only form of pure life insurance. The policy can be bought in increments of ten or twenty years.
Graham McKenzie is the content syndication coordinator a leading South African Life Insurance and Life Cover portal.