Life Insurance Policy Classification
Despite all of the numerous forms of life insurance policies that are available in this rapidly expanding market, every year you will see a term life insurance company offering new products to the public preaching the same special feature rather than paying attention to all of the different differences that exist from policy to policy. There are all kinds of different life insurance policies, including term life insurance, whole life insurance, no medical exam term life insurance, and so on and so forth. Life insurance contracts can be classified under six different groups, each of which will be defined briefly.
– Policies that are classified according to the term of the insurance policy – Life insurance contracts may either be classified as whole, straight life insurance policies or term life insurance. The first type of life insurance policy implies that the policy is going to continue during the remainder of the insured’s life, and the entire face value of the insurance policy is payable only when the insured dies. The second type, term life insurance refers to a policy that only pays out if the death occurs during a specific amount of time, such as five years, ten years, fifteen years or twenty years. No medical life insurance is a popular option both when it comes to whole life insurance and term life insurance, but no medical term life insurance seems to be the more popular of the two options.
– Policies that are classified according to the method of paying the premiums – Life insurance premiums are most traditionally paid on the annual premium level, meaning that the premium that the company collects every year will remain the same during the whole of life, or during a specific agreed upon term of years. In comparison to this method, there is also a natural premium insurance plan, where the insurance is granted as a renewable form of one year term insurance, with an annual price that increases from year to year in accordance with increases in the costs associated with insurance brought about by an increase in age and its effect on perceived risk. This plan is not often used anymore. Most, if not all, no medical term life insurance plans are annual premium level insurance plans, meaning that the premium collected by the insurance company remains the same every year regardless of changes in perceived risk based on the age of the insured.
– Policies that are classified according to the inclusion or the exclusion of a pure-endowment feature – Pure endowments are contracts that promise to pay the holder a stated sum of money, if he happens to be living at the end of a pre determined period, but if prior death should happen to occur, nothing is paid. Term life insurance consists of a promise on the other hand to pay a sum if a death occurs during a pre-determined period of time rather than before or after. In other words, these two promises are exactly the opposite of one another, but they can be combined within a single contract, which is endowment insurance. This is another type of term life insurance policy where it may be possible to find a no medical life insurance plan, though these types of premiums are much more popular in other forms of insurance policies and are not quite as common in policies that involve pure endowment features.