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Understanding Different Life Insurance Policies

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It is so often that consumers ignore the all important task of covering life; especially when it is so easy to get term life insurance quotes online.

Is it lack of familiarity of insurance products or just procrastination? Whatever that may be, it is good to remember that insurance products can protect you and your loved ones if the worst happens. So, if you have not bought a policy already, it is better to get started soon.

But remember, purchasing insurance simply because you need it, without really understanding which product to buy is a mistake. Ignorance or brashness can cost you unnecessary premiums or your loved ones may realize later that it does not cover their needs.

The first question most of us ask is how much is enough in insuring a life?
This is a pertinent question because here is where you have to begin. If you die today, what will happen to your family in a few years? Will they be impoverished? Or living comfortably and vacationing just the way they are doing now?

This depends largely on how much you have saved and how much insurance you have bought. Figuring out how much cover you need and getting the right life insurance quotes can be a thorny business, because the amount varies by situation. The variables are:

  • Your marital status
  • The number of your dependents
  • The earning capacity of each spouse
  • Whether both spouses work


Even if you are financially well-placed, having and maintaining a correct coverage is vital to a successful financial plan.
If you over insure, good money is wasted in the event of a premature death. However, if you under insure, your family will have to live a highly compromised lifestyle. A good way to solve this dilemma is to get Life Insurance Quotes online and compare different products.

The insurance industry's rule of the thumb is, 10 times annual salary of an individual. Yet, this formula need not be made sacrosanct. Some consultants provide more specific estimates depending on consumers' needs.

Many advisors recommend term insurance over permanent. Term insurance can cost only a fraction of whole life insurance or universal life insurance. To educate yourself on the differences in these types, you can get life insurance quotes for various products online.

However, a summary of these products will help in understanding the basics.

Table of Contents

Term life Insurance

This is the most basic of all policies. This product provides protection for accidental death and debilitating injuries for a specified period of time or for the term of the insurance. If you or your beneficiaries do not make any claim during the specified period, the policy will expire without any benefits.

Typically, term life insurance policies are cheaper to buy during the younger days when the risk of ill health or death is relatively low. Generally, the terms are one, five, 10, and 20 years or longer. To know the prices, you can get various Life Insurance Quotes online and compare.

The main features of term insurance are:

  • Temporary insurance cover
  • Low cost
  • Generally renewable
  • In some cases convertible to permanent life insurance


A healthy young person can also opt for level-premium insurance. Level-premium insurance is a policy for which premiums do not change for the entire duration of the policy.

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Whole life Insurance

A whole life insurance policy provides protection for the entire life, that is, from the date of issue until the death of the insured. Of course the condition here is, premiums must be paid without default. The chief benefit is, apart from life cover it also accumulates cash value.

A whole life policy typically matures when the insurer reaches the age of 100. The policy then would be fully paid-up and premiums cease.

Key benefits of whole life insurance policies are:

  • the beneficiary who gets the death benefit does not have to pay income tax
  • the policy owner has an option to borrow cash from cash accruals within the policy
  • The money drawn as loan is not subject to income tax even if loan is not paid.


Since the policy has cash value, insurers take the benefit to borrow cash by paying a low interest rate. If the outstanding loan is not paid at the time of the insurer's death, the beneficiary will receive the face value less the unpaid loan and any unpaid interest.

Universal life insurance

Universal life insurance entered the market as a flexible option of whole life insurance in the early 1980s. Here you can vary the amount of premium by using part of your accumulated earnings to cover the premium cost. You can even vary the amount of death benefit.

However, for this flexibility you may have to pay higher administrative fees. You can get a clear idea by getting Life Insurance Quotes for these products.

To summarize, universal life insurance has flexibility with respect to:

  • Premiums
  • Death benefits
  • Access to cash value


Because of the flexibility stated above, universal life insurance is a significant step forward, providing advantages for families who have fluctuations in their ability to pay.

Understanding the quotes

Understanding Life Insurance Quotes is the only way to know the best insurance rates and its intrinsic values. Many companies provide niche quotes for specific conditions. The conditions include senior citizens or people with high cholesterol, high blood pressure, depression or any family history issues. Hence you must narrow down to quotes that fit your needs.

Besides, understanding Life Insurance Quotes is essential because of many other variables. These include the type of product, the underwriters' terms and conditions; the commission the company pays to your agent and many more.

You must also look out for hidden costs in life insurance policies like fees and commissions. These may not surface until after you buy a policy. Therefore you must analyze life insurance quotes threadbare. You can even take assistance from insurance advisors, who, for a fee, will offer you unbiased guidance.

Internet is an excellent resource to get various Life Insurance Quotes and educate you on insurance basics. Moreover, you can also find a trustworthy broker to recommend you policies to suit your specific needs. Whatever be your financial situation, there is no way you can do without an insurance cover.

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