Life Insurance and Its Principal Types

​There are two main components in a life insurance policy - premium and death benefit. One significant type is term life insurance, which has the two mentioned components. The other type - whole or permanent life insurance - has an additional cash value component.

The Two Principal Types
There are two primary life insurance types - whole and term life. Often called permanent life insurance, whole life holds various subcategories, including variable life, whole traditional life, variable universal life, and universal life. In 2016 - based on the American Council of Life Insurers, individual life insurance policies gained about 4.3 million terms purchased and another 6.4 million dedicated to whole life.

Grouped life insurance varies from those sold to individuals. The principal types mentioned take more focus on individual life insurance.

Term
The purest life insurance form is Term Insurance. The only time it pays is when death happens during the policy term, often within 30 years. Term policies do not typically offer provisions for benefit.

• Level term is when the death benefits stay consistent until the policy duration ends.
• Decreasing term happens when there is a drop in death benefits, often increments one year throughout the term policy.

Permanent or Whole Life
Whole life, otherwise known as permanent insurance, pays you with a death benefit when you experience death - no matter how long you live. There are three essential whole life insurance types - variable universal life, universal life, and whole traditional life. Each class also has different variations.

Traditional whole life is designed to maintain it’s premium and death benefit at a consistent level until the policy ends. The cost also rises as the person ages forward, and it increases to a spike when the buyer lives up to beyond 80 years old. If the insurance company chooses to have an increase in charge with each passing year, it will be difficult for people to continue with their life insurance policy as they age.

Conclusion
Because of the mentioned problem, insurance companies now charge a more expensive premium during the insured's earlier years to invest the extra money and then use it as a level premium supplement that helps in the expenses of life insurance for the elderly.

At Roper Insurance Services, we do our best to ensure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (828) 697-6709 or Click Here to request a free quote.