Every individual at some point or another will in all probability come across circumstances in his/her life where the need to buy life insurance becomes a necessity. Life insurance might be necessary to confirm your family especially if you have small kids those need to complete their education and are not capable of providing for themselves are provided for if you breathe your last. It can as well be used to confirm your debts and mortgages are paid off in the event of your death and no untoward incident like foreclosure or bankruptcy take place with your family.

So, now that you’re convinced that life insurance is a necessity how you will choose a right type of life insurance policy. To start of, there are five basic kinds of life insurance. There is a term life insurance policy and four types of permanent life insurance policies. They differ from each other let us see how.

Term life policy is cover that is for a predetermined term, say for 10 years. The premium stays unchanged all through that tenure so will the death benefit or the sum assured stays the same throughout the tenure. At the end of that tenure, the policy either expires or needs renewal probably at higher premiums. For instance, if you have £150,000 of life insurance at a monthly premium of say £75 for 10 years you will need to renew after 10 years for the same amount for £100 per month. A few term policies incorporate a choice to switch over to permanent life.

Whole life policy is similar to term life policy only it has a death benefit that is assured in any case and the premium costs stay the same through out the entire life of the person. The insured person needs to pay for the premiums for the whole life to avail these benefits if not the policy lapses. Whole life as well builds up cash value. This cash value can be used for securing loans by the policyholder even as he is still alive. Variable life offers a death benefit that fluctuates in line with the returns on the invested part. The premiums are invested in the financial markets like stocks and bond market and the death benefit fluctuates in line with how financial markets behave whether they rise or fall.

Universal life offers flexibility in both premiums as well as death benefits. The premium and sum assured can be changed all through the term of the policy. The cash accumulated over the years can be withdrawn or have a loan against it. Universal variable life provides opportunity to invest money in conventional money markets like, bonds, stocks, index funds and securities. The returns are tax deferred and premiums are flexible. Furthermore, cash value can be withdrawn or have a loan against it.

It can be complicated to decide on which kind of life insurance is perfect. Employing a well-informed life insurance broker is always a good idea. Besides you can do some research on the internet by searching for several online insurance websites and getting some free online life insurance quotes.

Author Bio: Sandra is an expert in the field. For more information on cheap life insurance and on postoffice life insurance Please visit: http://www.einsured.co.uk/

Category: Finances
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