Types Of Insurance And Their Advantages And Disadvantages
As we all know, the insurance is a policy or contract between the insurance companyand the policy holder or the insurer wherein the insurance company is entitled to pay the insurer some money as per the insurance plan he or she has chosen, in the case of an untimely death of the insurer. It is to protect the family of the insurer or the policy holder (a member of the policy) who loses his life due to unfortunate incidents. Though there are different types of insurance available, the two most important types are that of the term and whole life where the latter is also termed as cash value insurance. However, both these insurances have their pros and cons. Let us discuss some of them in detail.
Advantages and Disadvantages of Life Insurance
Types of insurance
The first type of insurance is cash value insurance in which the policies compensate for the insurance expense. And some part of the insurance cover is invested on the investment vehicle scheme that generally goes on for a few years. Some of the notable cash value life insurance vehicles are whole life, variable life, paid-up and universal life insurance. You may also do your bit of research on the Internet powered by any of the services like ATT Uverse and gather more information on the types of insurance. Though they are different from each other, the basic purpose of all the above-mentioned insurance is pretty much the same. How does cash value investment scheme work? Basically, the client has to pay a premium amount on a term-basis and some cash to his account to the insurance policy that normally carries a death benefit scheme.
The next type of insurance is the Term life insurance that is slightly different from the cash value life insurance. Unlike the cash value insurance, the term life insurance doesn"t entail the insurer to have a cash value account. The main purpose of paying the premium in this type of life insurance is to cover the cost for the benefit scheme. As the name mentions, this type of life insurance is maintained on a specific term and at the end of the term, the insurer is entitled to purchase a new policy.
Both types of life insurance discussed in the above stanza have several advantages. The most striking thing about cash value life insurance is that it covers the entire life of the insurer or the policy holder. The best time to purchase this type of insurance is when you are young because that is when you need it the most. Another advantage is that the cash value life insurance can also be borrowed against life policy. In this case, the policy holders don"t have to pay the interest or any other earnings along with the cash value accounts. It"s not only the individuals who benefit from the cash value insurance but also the corporate. Coming to the term life insurance, the main benefit that they offer is they can be availed at cheaper premiums particularly when the person is healthy and young. The monthly cost of the cash value ranges from $20 to $30. The tem life insurance is ideal in cases where the financial obligations such as mortgage loans, education loans, and automobile loans are to be covered.
Always make sure that you consult an experienced insurance agent before you purchase a life insurance. Choose a policy/insurance that suits your family. For example, if you have a mortgage loan for 10 or 15 years, then you may opt for insurance covers based on the tenure and expense cover of your loan. Also decide whether you have to go for short term policies or long term policies depending upon your family needs.