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There are several types of insurance products available in the market today. We often are approached by insurance agents and we would not normally be able to tell right away which of their products we are interested in. Choosing the right product is very important so that this lifelong investment suits your needs and purpose.
What are the Different Types of Insurance?
1. Term Life.
The most common type of insurance product as it affords temporary protection. For instance you bought a house or availed a personal loan, the bank may require you to purchase a life insurance and designate the bank as primary beneficiary. In case something happened to you, the bank may no longer join in the liquidation of your estate. The proceeds of the term insurance will be used to pay for the remaining balance of your housing or personal loan.
If you are a young professional, term insurance is a good choice. Though this type of product affords protection only, it can be converted to a permanent insurance (to be discussed later) within a specified period of time. This is the most affordable insurance. And its coverage is limited, like one or ten years.
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2. Permanent Insurance.
The coverage of this type of insurance is lifetime. Aside from protection, it affords savings. If you are head of a family or single with dependents, this type of insurance suits you. The proceeds of the coverage can be used as an income continuity fund of your loved ones left behind. It can be used to pay utility bills, buy food for the table, and other basic family living expenses.
If you are in your twilight years and enjoying the fruits of your hard work but are worried that your sentimental properties will be disposed of by your loved ones to pay estate taxes, you may purchase a permanent insurance. Its proceeds can be used to pay for the costly estate tax and free your loved one from coughing out money just in case they do not want let go of the precious properties you left behind.
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