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What are the primary types of life insurance?

Life insurance is an important part of any financial plan. This coverage is commonly known for replacing the income of a deceased spouse or parent. However, depending on the type of policy purchased, there can be other benefits as well.

The two main types of this insurance are term life insurance, and permanent life insurance. Although each type of policy provides peace of mind for family members, there are some key differences between them.

Term Life Insurance

This type of insurance is fairly straightforward. The policy has a specific term, usually between one and 30 years. The policy only pays if death occurs during that term.

The two primary types of term life insurance are level and decreasing term. Here "level" means that the benefit remains the same over the life of the policy.

The other type is decreasing term. For this insurance, the amount of the benefit drops over the life of the policy. Usually these changes occur each year. Level term is by far more common, accounting for over 90% of the term policies purchased in the US.

Permanent Life Insurance

Whole or permanent life insurance pays no matter how long the insured lives. There is generally no time limit on the policy. Additionally, the premiums are invested and depending on the type of policy may earn interest over time.

These policies can be a valuable asset, and sometimes can be borrowed against. There are several types of whole life policies, including adjustable, variable, and variable-universal life.

Fox Insurance Agency

Located in Beaverton, Fox Insurance proudly serves all of Oregon and Washington State. As an independent agency, we are able to provide quotes from more than one insurance company. We do business with several nationally recognized, highly respected insurers.

We would be happy to help you find the right policy for you and your family. We have years of experience helping our clients find peace of mind. We would love to be your provider of choice. Contact us today for more information!

The information in this article was obtained from various sources and is not all inclusive regarding the subject matter. This content is offered for educational purposes only and does not represent contractual agreements, nor is it intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. The definitions, terms and coverage in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.