Global Courant
There are numerous companies today that offer life insurance. Although the core of the policy (ensuring a safe and healthy life for both the next of kin and the individual) does not change, companies still try to disagree with each other by making different classifications or splits.
Broadly speaking, life insurance consists of two parts.
1. Term life insurance Anyone can opt for term life insurance. This type of policy is basically designed to cover an individual’s short-term needs. For example, if the policyholder unexpectedly has a serious accident, he can claim the insured amount. But it also reimburses the next of kin in the event of the death of a family member. All in all, it’s a policy that helps cover the potential need for short-term life insurance.
Term life insurance is usually a renewable and convertible program. It ranges from one to a hundred years. If it’s a one-year program, the cost of coverage will increase after each year until it ends. Generally, the due date is at age 75. If the policy has a term up to the age of 100, along with the cash value, it then becomes part of the ‘whole life’ insurance policy. Very often it is noted that it is cheaper to buy a whole life insurance policy than a non-cash Term 100 policy.
2. Permanent life insurance – this is life insurance for the entire life of the individual. The value of this policy increases with participation in the program. Terms like Par and Non-Par are commonly used in this context. Par lifetime coverage generates dividends that are a partial return of the premium paid for coverage and investment growth. The amount of dividends continues to change annually. On the other hand, the non-par life insurance offers no dividends. The future cash values in these cases are not projected but insured or guaranteed.
o In addition, lifelong premium policies are also available. This includes a fixed premium that must be paid for a short period until it is paid in full. The death benefit in this policy is leveled and paid when the premium stops.
o A whole life insurance policy can also be split in terms of premium payment for 15 years, 20 years and 65 years. The conditions in these cases remain more or less the same.
o Universal life insurance is for people who need life insurance, have a large marginal tax bracket, have high RRSP and pension premiums, pay good taxes on investment income, want to have additional future income, and have investment prospects for at least 10 years. These policies are considered the most difficult of all insurance contracts.
The different types of life insurance explained
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