Life insurance policies are a form of contract with an insurance firm. As an exchange of the premium payments, the company will provide a good sum of payment which is known as a death benefit for the beneficiaries during the insured's death. What is life insurance? Click here to read more.

This simply means that a life insurance is based with the needs as well as the goals of the owner. A term life insurance usually provides a form of protection for a set period of time and a permanent insurance like a universal and whole life will provide lifetime coverages. You should however bear in mind that death benefits from various types of life insurance are income tax free.

There are different types of life insurance that are available today. Some of these are in the article below.

Term Life Insurance

The term life insurance is created in order to provide a financial protection for a certain period of time like for 10 or 20 years. Through the traditional term insurance, premium payments will stay the same on the coverage period which you choose. After such period, the policies then may offer a continued coverage, which is mostly at a higher premium payment rate. A term life insurance is mostly less expensive compared to the permanent life insurance.

A term life insurance proceeds could be used for replacing any lost potential income in working years. It could act as a safety net for the beneficiaries and it could also help to ensure the financial goals of the family, which will still be met like paying the mortgage, keep the business running and to pay for college.

You should however bear in mind that though a term life could be used in replacing a lost potential income, the life insurance benefits will only be paid at one time on a certain sum and not at regular payments.

Universal Life Insurance

A universal life insurance is a kind of permanent life insurance that made in order to help provide lifetime coverage. Unlike the whole life insurance, a universal life insurance policy is flexible and this will also allow you in lowering or in raising premium payments or coverage amounts in your lifetime. Also, because of the lifetime coverage that it has, a universal life has higher premium payments compared to the term life insurance.

A universal life insurance is usually being used as a part of a flexible estate planning strategy in order to help preserve the wealth that is to be transferred to the beneficiaries. Another use is for long term income replacement to where the need extends to more than the working years. Some of the universal life insurance product focuses in providing both the death benefit coverage as well as the building cash value and others places its focus in providing guaranteed death benefit coverage.

Whole Life Insurance

A whole life insurance is a kind of permanent life insurance that is made to provide lifetime coverage. Because of its lifetime coverage, a whole life mostly has higher premium payments compared to the term life insurance. Its policy premium are fixed and it also has a crash value that works as a saving component and it may accumulate tax-deferred over time.