The Different Types of Life Insurance
Deciding on the right type of life insurance can be a new journey, especially when it’s your first time applying and you aren’t familiar with some of the most frequently used terms. To help you form a baseline level of knowledge about the different types of life insurance, below is a list of some of the most common varieties. While this list will provide an introductory explanation about each type of life insurance, keep in mind that it’s important to work closely with an insurance agent when you’re actually ready to apply. Licensed insurance agents, like the independent agents at World Financial Group, are often equipped to help you determine which types of insurance may be more beneficial for you and your loved ones.
Accidental Death and Dismemberment Insurance
Accidental Death and Dismemberment (AD&D) Insurance is a type of insurance that provides coverage in the event of an accidental death or a serious injury resulting in specific types of dismemberment. In other words, if the insured person dies due to a covered accident or suffers severe injuries resulting in the loss of a limb, fingers, toes, or eyesight, the policy pays a benefit to the designated beneficiaries. The amount of the benefit varies depending on the specific loss, and policies often have a reference outlining the payouts for different types of dismemberment.
No Medical Exam Life Insurance
Sometimes referred to as “No Exam Life Insurance,” this is a type of life insurance policy that does not require the applicant to undergo a medical examination as part of the evaluation process. Traditional life insurance policies often involve a thorough medical examination, including blood tests, urine tests, and other health assessments, to evaluate the applicant's health and determine the risk for the insurance company. Instead, these policies usually are only available to individuals in a certain age range to speed up the approval process. These individuals can expect lower coverage amounts and higher premiums.
Long-Term Care Insurance
Long-term care (LTC) insurance is a type of insurance that provides coverage for certain costs associated with long-term care services. These services are often for seniors and may include assistance with daily activities such as dressing, eating and bathing, and other forms of home care and extended care. Long-term care insurance helps cover expenses that may not be covered by health insurance or Medicare for those thinking about retirement.
Term Life Insurance
Term life insurance is a type of life insurance that provides coverage for an individual over a specified time frame. Unlike permanent life insurance, which covers the insured for their entire lifetime, term life insurance policies last for a predetermined duration, such as 10, 20, or 30 years. If the insured person passes away during the term, the policy pays a death benefit to the designated beneficiaries. Once the term expires, the coverage ends unless the policyholder decides to renew the policy.
Permanent Life Insurance
Permanent life insurance is a type of life insurance that provides coverage for the entire lifetime of the insured for as long as the premiums are paid. Unlike term life insurance, which covers a specific term (such as 10, 20, or 30 years), permanent life insurance is designed to last throughout the policyholder's life, meaning that the policy will usually provide a death benefit whenever the insured passes away. Some permanent life insurance plans also come with the accumulation of cash value. This means that part of the premium payments go into a cash value account, which grows over time. Policyholders can access this money through withdrawals or loans during their lifetime.
Whole Life Insurance
Whole life insurance is a type of permanent life insurance that provides coverage for the entire lifetime of the insured, as long as the premiums are paid. Because of the policy’s longevity, it is designed to provide a guaranteed death benefit to the beneficiaries upon the death of the insured. Whole life insurance is also one of the types of permanent life insurance that can offer cash accumulation on the side. With lifetime coverage and consistent premiums, this type of life insurance is very predictable for the policyholder.
Universal Life Insurance
Universal life insurance is a type of permanent life insurance that provides flexibility in premium payments, death benefits, and the accumulation of cash value. Unlike whole life insurance with level premiums, universal life insurance allows policyholders to adjust the amount and frequency of their premium payments. These changes will also affect the death benefit that the beneficiary will receive. Similar to whole life insurance, universal life insurance can have a cash value component that accumulates over time. Universal life insurance is designed to provide policyholders with greater control over their insurance coverage and premium payments.
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