Beyond the general categories of permanent and temporary, life contract policy falls into four categories which are individual, group, credit and industrial insurance. As the name indicates the categories are classified by the market they cover.
Individual or ordinary life policy has the biggest market percentage and includes all forms of life insurance policies purchased in an individual basis. Whole life, term life and other endowments written on individual basis form this class of insurance. It is written for a face amount of at least $ 1000, but most companies specifies the minimum amount required to issue the policy.
Insurance coverage offered through the employers, or other organizations falls in the group insurance. The uniqueness of a group insurance is that insurability is not as strict as in the case of individual or ordinary coverage and in some instances the insurability is not required as in case of employers- employees sponsored group insurances. The individual covered has to be a member of defined group to be covered under the group policy. Some of the defined groups include employer-employee group, common interest groups such as professional organizations, trade associations, unions, lodges, fraternities, sororities and civic groups.
To safeguard credit worthiness and ensure the debt obligations are met in case of disability or premature death of an individual, a person can purchase the credit insurance through the creditor. The benefits paid by policy are utilized in paying debt obligation as a result of the disability or death of insured. The provision of the policy will determine how the creditor will receive the benefits, benefits can be dispersed as one time payment of debt obligation or continuation payment until the debt is paid off.
A less applicable insurance class in the current market is industrial life insurance. This type of insurance serves less than one percentage of current market. It was initiated in 19th century to meet the needs of industrial and factory workers and was characterized by issuance of small amounts. The policies primary paid for last illness and burial expenses and gave the industrial and factory workers who could not afford a large policy a chance to have policy coverage. Since the industrial workers income has increased significantly, the need of industrial life insurance drooped over the decades and a new variation of the policy which is home service life plan emerged. Because of the small face amount value issued the demand for this type of policy is limited.
An individual or policy owners should analysis the coverage as a totality of the different class of insurance to accesses how well he/she is covered. If an individual is covered under group policy he is should assesses his needs or objectives when buying additional personal coverage.