Life Insurance Policies: Coverages & Definitions You Need to Know
- Term - Protection during a limited number of years; expiring without value if the insured survives the stated period, which may be one or more years, but usually is 5 to 20 years, because such periods generally cover temporary protection needs. You may need this if you want to have a substantial amount of coverage at a minimum cost.
- Universal - Has a flexible premium. It contains renewable term insurance and a cash value amount that generally earns interest at a higher rate than a traditional policy. You may need this if you would like the flexibility to reduce or increase your death benefit and pay your premiums at any time and in any amount (subject to certain limits) after your first premium payment has been made.
- Whole - Permanent level insurance protection for the “whole of life” from policy issue to the death of the insured. You may need this if you would like permanent life insurance with a guaranteed cash value.
- Accidental Death - A policy or a rider that provides for payment of an additional benefit when death occurs by accidental means. You may need this if you work in a risky field and would like extra protection.