Insurance Over Texas Offers Texas Term and Whole Life Insurance in the Houston, TX Area
Learn about Texas term and whole life insurance coverage and policies below.
There are two major types of Texas life insurance; term insurance and whole life insurance. Whole life is sometimes called permanent life insurance, and it encompasses several subcategories, including traditional whole life, universal life, variable life and variable universal life. In 2003, about 6.4 million individual life insurance policies bought were term and about 7.1 million were whole life.
What are the principal types of life insurance?
Life insurance products for groups are different from life insurance sold to individuals. The information below focuses on life insurance sold to individuals.
Term Life Insurance
Term Life Insurance There are several different types of term insurance you can consider:
- Renewable Term Insurance
- Convertible Term Insurance
- Level Term Insurance
- Decreasing Term Insurance
- Increasing Term Insurance
Term Insurance is the simplest form of life insurance. It pays only if death occurs during the term of the policy, which is usually from one to 30 years. Most term policies have no other benefit provisions.
There are two basic types of term life insurance policies; level term and decreasing term.
Level term means that the death benefit stays the same throughout the duration of the policy.
Decreasing term means that the death benefit drops, usually in one-year increments, over the course of the policies term. In 2003, virtually all (97 percent) of the term life insurance bought was level term.
For more on the different types of term life insurance, click on Term Life Insurance.
Four Basic Types of Permanent Insurance:
Whole Life Insurance
- Whole Life
- Universal Life
- Variable Life
- Variable Universal
- Joint Whole Life
- Survivorship Life
Whole life or permanent insurance pays a death benefit whenever you die, even if you live to 100! There are three major types of whole life or permanent life insurance; traditional whole life, universal life, and variable universal life, and there are variations within each type.
In the case of traditional whole life, both the death benefit and the premium are designed to stay the same (level) throughout the life of the policy. The cost per $1,000 of benefit increases as the insured person ages, and it obviously gets very high when the insured lives to 80 and beyond. The insurance company could charge a premium that increases each year, but that would make it very hard for most people to afford life insurance at advanced ages. So the company keeps the premium level by charging a premium that, in the early years, is higher than what is needed to pay claims, investing that money, and then using it to supplement the level premium to help pay the cost of life insurance for older people.
By law, when these over-payments reach a certain amount, they must be available to the policyholder as a cash value if he or she decides not to continue with the original plan. The cash value is an alternative, not an additional, benefit under the policy.
In the 1970s and 1980s, life insurance companies introduced two variations on the traditional whole life product?universal life insurance and variable universal life insurance.
For more information about the different types of whole life/permanent insurance, Whole Life Insurance.
