What are the main types of life insurance policies?
[social_share]Life insurance policies can be divined into several types which however can be broadly categorized into two main types which are the whole life insurance and the term life insurance.
A whole life policy – a whole life policy is one in which the insured has to ay the premium for the entire duration of his life or till he reaches the age of 100. Incidentally the whole life policy is the cheapest forms of life insurance and one of the most widely used as a result. Say an insured takes out a life insurance policy at the age of 30. He has to continue paying the premium till his death or the age of 100.
Life insurance or term insurance &ndash a term insurance or a life insurance can be taken for the sole purpose of providing the much needed financial support for your family, loved ones and your estate in the untimely death of yourself. There is absolutely no guarantee for anything in life and worst of it all there is no guarantee for life itself. So the only thing that matters is how well you have made the preparations for those you love. A life term insurance policy provides the much needed financial support when that eventuality happens. This means even when you are not around, your family much needed financial support is going to be there with them. Till such time that you children are up on their feet and can fend for them, you will have done your bit to ensure their education and maintenance of a decent lifestyle even after your death or diagnosis of a terminal illness.
Trauma insurance &ndash trauma insurance or critical illness insurance is one of the special types of life insurance policies that allow you a lump sum payment at the untimely event of your death or the diagnosis of a terminal illness such as cancer or stroke etc. The payment is due when you chose to which gives the freedom and flexibility to decide when you need it. Trauma insurance provides a lot of flexibility for the person affected. He can chose to take time off work and start a treatment program followed by a rehabilitation program or simply chose to spend time with his family without having to think about work and money.
Income protection insurance – Another life insurance type is the Income protection policies. They are designed to ensure the ongoing income of the insured even after an injury or critical illness that impairs him either temporarily or permanently from working and thereby providing a way to support himself. This life insurance type is also known as salary continuation policy for the sole reason that it provides up to 75% of the current salary income when you are diagnosed with the critical illness and you can no longer continue working.
Several insurance companies in Australia provide interesting variations of the income protection insurance depending upon your requirement and preference. When comparing life insurance quotes online from various life insurance companies, try and find out the exact details of the premium payment and also the nature of the waiting period, if any, and the payment types before settling down for one.
OnePath which is an ANZ company provides income protection insurance policy which is designed for providing the insured a monthly income benefit when he is diagnosed with a critical illness or terminal illness that prevents him from going out and working. Similarly Asteron provides an income protection insurance that provides up to 80% of the gross monthly income in the events of a critical illness that presents the insured from working.
Endowment policies are becoming increasingly popular in terms of both a life insurance and also as a pension scheme post retirement. The fact that this insurance requires payment of the premium right till the maturity of the policy, makes it a bit more expensive compared to whole life policies. But there is one significant advantage that is the in the case of whole life policies, you have to pay the premium even when you have retired making it a financial burden on your post retirement meager financial resources. Whereas the endowment policy matures, if planned properly, when you retire that makes it start providing you the returns when you no longer have a fixed income source making it a preferred pension system post retirement.
There are other several other insurance policies which are designed to make a savings on the over all premium that is to be paid. For example the Joint Life Policy which is a scheme in which life insurance of two or more people is done together. The payable premium is considerably smaller compared to individual insurance premiums. The policy matures at the death of either of the joint insured parties or at the end of the policy period.
