What are the Types of Life Insurance?

Planning on buying Life Insurance? But did you know that there are several types of life insurance available on the market?

Between the different types of life insurance it is broken down into two types:

Term Life Insurance and Whole Life Insurance

Term Life Insurance is simple. It is basically pure life insurance. Nothing else. Just like auto insurance.

It is less expensive than if you wanted to buy Whole Life Insurance.

It is set for a period of time so you can buy term life insurance in time increments of 1 year up to 30 years (may be more or less depending on the life insurance company that you buy life insurance from).

Term Insurance:

• Pure Life Insurance
• Less Expensive of the two types of Life insurance
• Sold in time increments of 1 year to 30 years

What term life insurance company to buy from? If you've decided to buy term life insurance then go through a few life insurance quotes and choose the companies that appeal to you.

Check their financial credit ratings in the list of life insurance quotes. It's generally ABC's but there may be different symbols used depending on which rating system is used for life insurance companies.

Example: Highest Rating / Financial Strength Rating of Company:

Standard and Poor’s: A++ (Secure/Superior)
A.M. Best: AAA (Extremely Strong)
Moody’s: Aaa (Exceptional)
Fitch: AAA (Secure/Highest)

Lowest Rating

Standard and Poor’s: S (Rating Suspended)
A.M. Best: R (Regulatory Action)
Moody’s: C (Lowest)
Fitch: SR (Suspended Rating)

The 2nd of the two main types of life insurance is Whole Life Insurance.

If you plan to buy Whole life insurance remember that it is basically Term Insurance with an Investment component which is sold as "saving for your children's college fund" or "forced savings for retirement". It's quite a bit more expensive than Term Life Insurance.

In regards to the investment component, types of life insurance investments include money market, mutual funds and stocks.

Types of Whole Life Insurance:

• Traditional Whole Life Insurance
• Variable Life Insurance
• Universal Life Insurance

Those types of life insurance are directly related to the investment vehicles the policies are associated with.

Time period for Whole Life Insurance:

You are paying monthly life insurance premiums on the policy for the rest of your life.

Investment Vehicle: You can borrow from and pay back with interest. If you pass on your family does not receive the investment and only the death benefit.

Essentially you are paying additional premium for an life insurance investment vehicle that you can ONLY borrow from but never receive.

To summarize Whole Life Insurance:

• Term Life Insurance bundled with Investment
• Time period: Rest of your life
• Several types of Whole life insurance correlated with the investment vehicle
• Can only borrow from the investment but family will never receive it upon death

If you are looking to purchase life insurance we highly recommend purchasing Term Life Insurance. With money that you save from purchasing Term Life insurance you go on and take those funds and place them in an investment vehicle of your choosing.

Our Life Insurance Recommendation:

Never mix any type of Life Insurance with any investment. They were never meant to go together.