Times when one or two types of Instant Life Insurance prevailed, have rolled up and disappeared. Today, as we are all prepared to step in the third decade of the 21st Century, our needs evolve. Therefore, Insurance companies have introduced a myriad of Insurance types to meet our ever-changing wants. However, deciding which one suits best for you with your maximum customized coverage can be difficult. Therefore, following we have outlined some of the most common types of Instant Issue Life Insurances available out there, to help you get familiar with them:
To begin with, Instant Issue Life Insurance can be vastly divided into two categories.
1) Instant Issue Term Life Insurance: As the name suggests, it provides pure death-benefit within a specified time span. This policy is particularly designed to protect your dependents after you depart. It is extremely easy on pocket to purchase. No wonder, it is the foremost choice for young and healthy applicants. However, the company is only liable to pay if the insurer expires within the term of the policy. The insurer has the choice of selecting terms ranging from as low as 5 years and 10 years to as high as 20 years, 25 years or 30 years. Further, despite their limited term, most issued instantly life insurance policies do not technically lapse until the insurer touches 95 years of age but for that he/she needs to keep on renewing the existing policy by continuing to pay the premiums.
2) Instant Issue Permanent Life Insurance: Under this banner, the company is liable to grant death-benefit, no matter when you die, what age you cross- even if you live to be a 100. Under this remarkable, though a bit costly strategy, a Cash Value component is added. Basically, a higher premium is charged throughout the life of the policy which is thereafter invested in equities and funds. After a year or two, these investments begin to pay off. Consequently, a part of the profits is made available to the policy holder by law, while the rest is kept by the company to compensate for the low premiums charged or death benefits reimbursed in later years.
Within each of these lie several other sub-categories:
1) Instant Issue Term Life Insurance
The three simplest kinds of this are:
- a) Level Term: The key characteristics of Instant Issue Level Term Life Insurance is that, death benefit stays constant throughout the life of the policy. According to statistics, in 2003, virtually 97 percent of the term life insurance bought was indeed level term. The most eminent Instant Issue Life Insurance Companies will offer a One Year Renewable Option after the agreed term expires.
- b) Decreasing Term: Death-benefit diminishes with the passage of every year, under this system and the policy officially subsides when it reaches Zero. This is usually beneficial for individuals who wish to pay the unpaid mortgage (as the amount of mortgage decrease every year with less and less remainder of the balance to be paid).
- c) Increasing Term: Sought rarely, it proffers the virtue of a growing death benefit over the course of the policy’s term. It is bought mostly by young couples as the expense of little dependents or other living riders is high in the initial years.
2) Instant Issue Permanent Life Insurance
Although, there are innumerable sub-categories of Instant Issue Permanent Life Insurance, immense emphasis is laid on the following four kinds:
- a) (Traditional) Whole Life: Offering a supplementary Savings Account, it’s a pocket-friendly approach where the premium stays uniform alongside the specified death benefit for the entire policy’s life. The premium is locked ruling out any possibility of its increment regardless of age, adverse health issues or inflated economy. This is also one of its kind instant issue life Insurance policies which is accessible to high-risk applicants. Also, the cash held in the cash value component can rise exponentially, if retained, owing to its tax deferred nature coupled with the occasional dividend payments.
- b) Universal or Adjustable Life
Introduced in the 1970s and 1980s, it is an altered version of the Whole life one, facilitating far more flexibility than the latter as the insurer has the freedom to vary the premium payments i.e. to either direct them towards the policy’s death benefit or the Savings Account/Investment Component within certain guidelines. That’s a blessing in disguise when the applicant is undergoing a temporary financial crises, seasonal unemployment or liquidity crunch. In addition, under certain circumstances, if you pass the medical examination, you are eligible to apply for an increase in death benefit.
- c) Variable Life
If you adhere to the principles of Variable Life Insurance issued instantly, then you enjoy the privilege of investing the cash component (which backs the death benefit) in stocks, bonds and mutual funds. Although, this will make room for expansion of the Savings Account, it carries massive risks posing a detrimental effect to the cash value as well as death benefits due to the unpredictability of the Stocks and Money Market. This will ultimately lead to your premium going down the drain, though some companies promise the security of death benefit at a certain maximum point.
- d) Variable Universal Life
Purchasing this policy will enable you to avail the features of both, the instant issue Variable and Universal life Insurance mashed together for example, rendering the policyholder to take part in a variety of different investment options and earn rewards while simultaneously allowing them to vary the premium and death benefits.