The Basics of Life Insurance
There are two types of insurance: Temporary and Permanent. When summarized in their most basic form, temporary life insurance allows for a specified term, at a specified premium. Permanent life insurance, though its premiums can be from 8-10 times higher for the same coverage, allows special tax privileges, accumulating cash value, and other options.
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About Temporary Live Coverage
For temporary insurance, the insurer can change rates from term to term and the insured has the option of either renewing their policy or cancelling. A very common type of this policy is known as the annual renewable term policy. This is the most inexpensive policy, and premiums change from year to year.
Another type of temporary insurance includes the guaranteed level term life insurance, which sets rates for a longer term, sometimes 10, 15, or even 30 years. The insured is guaranteed a flat rate during that time. Of course, the longer the term, the more expensive the monthly premium will be, simply because as the insured grows older, the risk becomes greater.
About Permanent Life Coverage
Permanent insurance has a large number of types, including whole life insurance, universal life, and endowment. Many of these options allow the beneficiaries to avoid expensive tax burdens through the use of estate planning. These insurance policies build cash value as the policy matures, and the insured can even invest or borrow on the face value of their policy.