News Hub

Types of Life Insurance Policies in the U.S.

List of insurance Polices in US.

Spread the love

In life insurance, the policyholder is required to pay a recurrent amount to the insurance company. If the policyholder dies during the specified time, then he gets a certain amount of money (the death benefit) as agreed by him at the start of the term. There are different types of life insurance policies in the U.S. and they are as under:

  • Whole Life Insurance
  • Universal Life Insurance
  • Variable Life Insurance
  • Guaranteed Issue Life Insurance
  • Final Expense Insurance
  • Term Life Insurance

Here is the List of Types of Life Insurance Policies in the U.S.

Types of Life Insurance Policies in the U.S.

Whole Life Insurance

Whole life insurances in the U.S is permanent life insurance that is linked to the life of the policyholder. This policy is kept throughout the life of the policyholder. The whole life insurance includes premiums (the incremental amount paid by the policyholder) that the policyholder will pay throughout his life.

They include premiums, death benefit and money value. These premiums can be paid once, yearly or monthly and with some of the insurance companies, you can limit it to 65 years or 100 years, and it is because people don’t prefer to pay after their retirement, whichever suits the person.

When the policyholder dies, a certain amount (death benefit) is given to the beneficiaries. Every person can decide for himself, according to his requirements and his family’s requirements.

Sometimes, the premiums can change and the policy that was affordable for you 20 years ago might no longer be affordable. You can get rid of this by selecting the policies that guarantee the same premiums throughout the course of the policy.

Pros and cons

The pros include:

  • It is a tax-free policy. There is no tax on the amount you make
  • The premiums are fixed and they do not increase
  • If you get old and develop a medical condition, you will be covered under the same insurance
  • You get lifetime coverage
  • You can always cancel the subscription and receive the money you paid

The cons include:

  • They have relatively high premiums
  • They are difficult to understand for a layman.

Universal Life InsuranceTypes of Life Insurance Policies in the U.S.

Universal life insurance in the U.S. is permanent insurance. Universal life insurances contain the element of savings and they have low premiums. Majority of the Universal life insurances policies out there have flexible premiums.

Universal life insurance includes premiums and cash value. The policyholder has the luxury of adjusting his premium amounts. These are the payments that keep the policy active and as the person ages, the cost of insurance increases.

Pros and cons

The pros include:

  • It is relatively more flexible than other insurance policies
  • Cash value increase variably that can yield more profit
  • More chance of cash value increasing

The cons include:

  • The premium rates are most likely to increase
  • Variability of cash value is a double-edged sword and it can also act against you in decreasing the yield

Variable Life Insurance

Variable life insurance is also permanent life insurance. Variable life insurance includes investment in the policy. The policyholder has a cash value account that is part of sub-accounts in the policy. These sub-accounts are only available in variable life insurance.

The policyholder has to keep in mind that variable life insurance is a gamble. If the market is up, you can get a good amount and vice-versa.

Variable life insurance is really unstable and they include more risk than other insurance policies. But the upside is that you can have various tax advantages.

Pros and cons

The pros include:

  • It has higher growth potential
  • It has guaranteed death benefit
  • The payments are fixed

The cons include:

  • It offers a greater risk
  • It is really difficult to understand
  • There are many investment options that may get confusing

Guaranteed Issue Life Insurance

Guaranteed issue life insurance is the policy that does not demand you to answer medical questions nor does it require your medical exams and medical and prescription records. Any person who is sick and cannot get other insurance policies, he can choose the option of Guaranteed Issue Life Insurance.

Now the question you may ask is how can they afford that? There is a catch. There is a waiting time for Guaranteed Issue Life Insurance and if the policyholder dies during this waiting period, his beneficiaries will not get the death benefit.

But the beneficiaries will be compensated by giving them the premiums already submitted by the policyholder plus the interest.

Guaranteed Issue Life Insurance is for the people that are seriously sick. They cannot get other insurance policies and that is why the premiums of Guaranteed Issue Life Insurance comparatively high.

Pros and cons

The pros include:

  • Easy to get the insurance
  • No medical requirements

The cons include:

  • The waiting period is exempted from the death benefit
  • Really high premium amounts

Final Expense Insurance

Final Expense Insurance is life insurance that is relatively affordable. It is really easy to get approved for final expense insurance policies but they have a really low death benefit. It is ideal for the person who is on a tight budget.

If a person wants to cover his burial and funeral costs, he can use final expense insurance policy. But, if you are looking to get the amount for long term expense of the beneficiaries, final expense insurance is not for you.

Pros and cons

The pros include:

  • It is a budget-friendly option
  • The premiums are affordable
  • No medical requirements

The cons include:

  • The death benefit is really small
  • The premiums are high compared to the payoff

Term Life Insurance

Term Life Insurance is the life insurance that gives the given death benefit to the beneficiaries if the person dies in a species period. If the person does not die, he can renew the policy or he can let it expire.

Term Life insurance gives the death benefit on the death of the person in a specific period of time. Other than that, it does not have any saving or investment benefit and it depends upon the age and health of the policyholder.

When the person applies for the term life insurance, the company take a complete and thorough medical exam. It also varies on the age, gender and medical conditions.

Once the process is done, the person gets insured and if the person dies during the period, his beneficiaries will get the death benefit. If the policy expires and is not renewed the death benefit will not be given.

Pros and cons

The pros include:

  • It provides good death benefits
  • The death benefit is guaranteed during the specific period

The cons include:

  • There are no cash value benefits
  • If it expires before the death of the policyholder, the death benefit will not be given.

We hope that now all Types of Life Insurance Policies in the U.S. are cleared.

Read Also: JBS Inks MoU with EFU Life to Upgrade Storage Solutions


Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *