Life insurance policies have been designed in way where they are to meet the specific needs of the policy holder and his dependents. As such, you’ll find there are various classifications and types of life insurance policies and all designed so that the needs of every holder can be met.
There are four general classifications as to life insurance policies. These four are:
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Those according to Nature – These life insurance policies are distinguished with others based on the nature of the benefits which they offer. Policies according to nature also have two types of policies under it including:
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Temporary policies – These policies only offer protection or a death benefit that applies only at a definite period of time.
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Permanent policies – These, on the other hand, offer benefits that applies over the policy holder’s lifetime. It includes both death and living benefits with living benefits including cash values, anticipated endowments, forms of dividends, etc.
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Insurance according to Coverage – This type of policies are distinguished from others in a way they are based on the number of persons to which the specific policy applies. Types of policies according to coverage include:
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Individual policies – Life insurance policy wherein only one person is ensured or protected.
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Joint Life policies – In this policy, the lives of two or more persons are covered. However, the first death among the covered lives will in effect terminate the policy.
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Group policies – As the name suggests, this policy covers the lives of persons in a group.
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Based on the Participation in Divisible Surplus – This policy is noted among other classifications as it is based on whether or not a person is at liberty to receive dividends. It can be either:
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Participating – This entitles policy holders to receive dividends which come from the surplus earnings of the insurance company.
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Non – Participating – In this policy, dividends are not shared.
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According to one’s line of business – This type of policy are based on what segments of the market the policy caters. Policies of the this classification can be categorized as:
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Ordinary – These are policies designed to cater to middle as well as upper income earners.
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Industrial – Policies under this category is geared to cater low-income earners. As such, premiums under this policy can be paid in daily, weekly or monthly basis.
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Group – This policy are designed to cater to the needs for insurance of employee groups and other groups of similar nature. Being employees, the premium of their insurance are usually deducted from their salaries.
These are the major four classifications of life insurance policies which you need to know. Knowing these, you’ll be able to choose exactly what type of insurance policy you would want. With so many to choose from, you have to take time and effort in learning the kind of insurance that can meet your needs. For that, it will be wise for you to consider researching about insurance policies, or perhaps talk about it with an insurance agent.
