Life Insurance Policies

Written by Amy Hall
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If you are in the process of shopping around for life insurance, you have probably stumbled upon the fact that there are various life insurance policies from which to choose. It can be somewhat confusing trying to decipher the difference between term life insurance, whole life insurance, universal life insurance, and ROP life insurance. These categories make up the bulk of life insurance policies taken out by consumers.

Let's take a brief look at these categories, so that you have a clearer understanding of what they are and how they work. First up will be term life insurance. In a nutshell, term life insurance is usually cheaper in terms of rates, and it can be taken out for a specified period of time, anywhere from five years up to 30 years. Term life insurance can provide adequate coverage at very affordable rates, which is why it is a popular type of life insurance policy.

Whole life insurance is different from term in that it actually builds value over the years. It is also possible for the policyholder to surrender the policy for cash before the date of maturity, whereas this is not possible with a term life insurance policy. Whole life insurance is more expensive, but there is no set time period for coverage. In general, the premiums for whole life insurance remain the same for the duration of the policyholder's life.

Understanding the Various Life Insurance Policies

ROP life insurance stands for Return of Premium, which is a type of term insurance. This is a newer type of coverage, which has the lower rates associated with term insurance, with the option of the policyholder getting a refund on the premiums paid during the level term period. Of course this requires that the policyholder is still living when the term expires. ROP plans are available for 15, 20, or 30 year terms.

Universal life insurance is very similar to whole life insurance, with the difference being that the policies distinguish and itemize the protection element, the expense element, and the cash value element. There tends to be more flexibility with this type of policy as opposed to the whole life insurance policy.

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