Life insurance is a contract in which a policyholder pays regular premiums in exchange for a lump-sum death benefit paid to the policyholder's beneficiaries. The lump-sum benefit is paid when the policyholder either passes away or a specific amount of time has passed. Life insurance policies can provide financial security for surviving family members by replacing lost income and covering expenses.
There are a number of different types of life insurance policies (sometimes referred to as products)—all of which generally fall under the categories of term life insurance and whole life insurance. The names and terms of different life insurance products in these two categories vary from one insurance company to another.
Some examples of life insurance products include:
• term life insurance
• whole life insurance
• universal life insurance
• indexed universal life insurance
• guaranteed universal life insurance
• variable life insurance
• variable universal life insurance
• hybrid life insurance with long term care
• group life insurance
• mortgage life insurance
• credit life insurance
• joint life insurance
• simplified issue life insurance
• guaranteed issue life insurance
• accidental death and dismemberment insurance
In Texas, life insurance is regulated under state statutes and overseen by the Texas Department of Insurance (TDI). The regulation covers various types of life insurance products, including term life, whole life, universal life, and others. Term life insurance provides coverage for a specific period, while whole life insurance offers coverage for the policyholder's entire life, typically including a savings component. Universal life insurance is more flexible, allowing policyholders to adjust premiums and benefits. Other products like variable life and variable universal life involve investment components, and their value can fluctuate based on the performance of the underlying investment options. Hybrid policies may combine life insurance with long-term care benefits. Group life insurance is often provided by employers, whereas mortgage and credit life insurance are tied to specific loans. Joint life insurance covers two lives, usually spouses, under one policy. Simplified issue and guaranteed issue life insurance policies do not require a medical exam but may have higher premiums or lower benefits. Accidental death and dismemberment insurance provides benefits for specific types of injuries or death caused by an accident. It's important for policyholders to understand the terms and conditions of their life insurance policy, and they may wish to consult with an attorney to ensure their policy meets their needs and complies with Texas regulations.
