When it comes to life insurance, there are actually two general types of policies one can purchase—term and permanent. For the purpose of knowing exactly what type of life insurance policy to purchase, it would be good to know the different features of term and permanent life insurance policies.
Those who do not have that much extra money to spare may consider purchasing term insurance policy where the rates are much more affordable compared to the other type. However, this is also offset by the fact that insurers cannot expect to get cash values after the end of each term and benefits are only paid only within the time frame specified by the policy and not beyond. Also, term insurance is also renewable, so long as the policyholder makes payment on time and did not supply any false information.
However, those looking for better deals when it comes to life insurance may consider purchasing permanent insurance policies which provides death benefits as well as long term financial protection. There are even permanent insurance policies that states for a specified time frame for payments. Beyond this time frame, policyholder may still enjoy coverage without having to pay anything. Consequently, the rate for this type of insurance policy is higher and would only be advisable for those with enough assets. To be able to make timely payments, a potential policyholder need to determine first if he or she will be able to spare enough cash apart from all other personal financial obligations that need to be fulfilled, such as credit card payments, mortgage, and cost of living expenses.
The state of Maryland allows a 10-day period from receipt of policy in which policyholders can return their policy and ask for refund of the premium. This is termed the free-look period, in which all insurance providers within the state are required to adhere to.
In the case that the insurance company becomes bankrupt, the state also makes sure its policyholder have some form of protection. To this end, the Life and Health Insurance Guaranty Corporation was created to continue coverage and would often look for other insurance companies to transfer the policy to. In order to avail of this guarantee, however, policyholder needs to make sure that the insurance company they are dealing with is a member of the corporation and the insurance product they purchased is fully certified to be sold within the state.