There are several types of life insurance plans available, designed for different needs and affordability. Understanding what these types are and what they entail is important for making the right decision.

The first is term life, which is very straightforward. With this type you pay for coverage for a specific period of time and designate a beneficiary. There are also subcategories of term life.

The second is whole life insurance. Whole life covers you for your entire life rather than a specific term. A whole life policy costs more on average and has higher premiums than term life policies. , There is an investment aspect to these types of life insurance however, and lifelong coverage is appealing to many insurance shoppers.

A third type is universal life coverage. If you so choose, you can add a preferred amount to the minimum price of the premium. The insurance company will invest the funds from returns, or leave them to accumulate. A subcategory of universal life insurance is universal variable life. Customers choose the investments rather than the insurance company.

Variable life is another type of life insurance. With this coverage, there are more investment opportunities, including stocks. Variable life is similar to universal coverage and returns are used towards premiums or allowed to accumulate. The beneficiary will receive either the value of the policy, or in addition to a portion the full cash investment return account.

One of the final common types of life insurance is Endowment. This is a savings strategy contract designed to pay a lump sum after a specified term of maturity or on in case of an early death.

To fully understand life insurance, you must first review the basics such as how much coverage you require, which types of life insurance are appropriate and how to begin the underwriting process.

DS Jones