life insurance

What types of life insurance in US?

This is everything you need to know to choose the policy that best suits your situation

Beyond all the tangential issues that surround our lives, enjoying our family and close people always ends up being the most important thing. A point where protecting them will also be essential, especially if we have children or dependents who depend on our care and sources of income.

For this reason, and although sometimes it is not entirely pleasant to think about unpleasant future scenarios, it is convenient to consider what could happen if we ever miss them. The function of a life policy is to make these assumptions more bearable and, although it is not mandatory to have it, it will be essential if we want to enjoy ours with peace of mind.

And it is that this type of insurance has the main objective of protecting our family or loved ones in the event that a misfortune happens to us. The idea is that the insurer pays the beneficiaries a specific sum that, to a certain extent and at least from an economic point of view, compensates the loss and all the situations that may arise from the death of the client.

Preliminary considerations about life insurance

However, and beyond these general features, it is convenient to know some details and know exactly how insurance of this type works, as well as what coverages and policies are best suited to our situation and personal characteristics. A point at which both our needs and income come into play, as well as the number of beneficiaries we wish to cover; among many other issues.

Before exposing the different types of life insurance that we can opt for, it is necessary to review what we are talking about when we refer to this product. Basically, it is a personal policy that offers coverage on the risk of death of the insured, as we have explained, and whose objective is focused on guaranteeing that the client’s beneficiaries receive financial compensation in said situation.

In reference to the parties involved in this insurance, we have, on the one hand, the insured – who is the one who acquires the coverage – and, on the other, the policyholder – who is the one who subscribes and pays for it. Finally, we have the beneficiary , who receives compensation when the circumstances contemplated in the contract are met for it to become effective.

What types of life insurance are there?

As has been explained, there are different types of life policies that contain various options and different peculiarities that make them be adapted according to the client who is going to hire them. These are its main characteristics.

term life insurance

In this case, the client can sign up for the policy for a specific period of time, that is, it is not a permanent period but rather a specific period that can range from a few days, several years or until the client reaches a certain age. . These periods are aimed at covering specific needs such as, for example, going on a trip or with the aim of protecting the development of a risky activity or profession that will end after a few years.

As is evident, if the insured does not suffer any mishap during the agreed period, the insurer will not pay any type of compensation. In any case, it is a very advantageous policy for young people, since it is usually cheap for this type of public and very burdensome for older people. Likewise, we must comment that this type of insurance has different types of premiums that the insured must pay.

  • Increasing or renewable premium: it is a payment that is modified annually depending on the age that the insured person reaches. The older the insured, the more he will pay for the service, in reference to his higher mortality rate.
  • Level or constant premium: in this case, the policyholder will pay more than what corresponds to him for his age the first years in a compensatory way, that is, to pay less than what he would touch in the future.
  • Decreasing premium: for, for example, bank loans. The beneficiary will be the bank itself and the insurer will pay the remaining payment that is pending.

whole life insurance

The main nuance of this type of policy is that the insurer would pay the compensation to the beneficiaries without taking into account the time of death. In addition, they cover for life, and their purpose is to provide the family or beneficiaries with amounts that compensate for the loss of income.

As for the premiums that can be chosen in this type by the insured, they are the following:

  • Lifetime premium: whose payment is made until the moment of death.
  • Temporary premium: the payment is executed during a certain period of time, such as, for example, twenty or thirty years. However, insurance coverage would be available until death occurs.

Savings insurance or for cases of survival or retirement

They have the purpose of providing the client with a specific monetary amount at the end of the period of time agreed in the contract. Its basis is investment in the medium or long term and it is conceived as a kind of complement to retirement or in the event of possible disbursements made in the future. 

mixed insurance

It is one of the least known types of life insurance, but its usefulness is not negligible. It is a kind of hybrid insurance that has, within the same contract, a risk insurance and a savings insurance.

In this way, the client will be covered in the event of his death but, at the same time, he will be able to benefit from the agreed benefits if he survives the age stipulated in the contract. It should be noted that, if the first of these options occurs (you die), the beneficiaries will be the ones who benefit from the compensation.

rent insurance

In annuity insurance, the insured person will have guaranteed formal and life annuity when they pay a single amount or a premium during a certain period. For this first (life annuity) the payment is of a specific amount and is disbursed from the moment the policy comes to an end and while the insured is alive. The amount can be fixed or variable.

For its part, temporary income provides a fixed income for a certain period of time. With the comparator you can find the cheapest policy that best suits your needs in a personalized way and in less than three minutes.

Risk Life Insurance

Life Risk insurance can be defined as a policy for protection against the death of the insured of the beneficiaries he chooses. The form of the premium can be annual, and the way of calculating it is based on three main factors: age of the insured, medical history and the capital to be covered.

The way this insurance operates is based on the fact that if the insured dies, the beneficiary will obtain the capital set out in the contract, and its objective is to protect the beneficiary in the event that the insured is absent. The policy is canceled if it comes to an end before death can occur. 

Leave a Reply

Your email address will not be published.