Categorized | Insurance

Understanding Different Types of Life Insurance

If a disaster strikes and you have an untimely death, what will financially happen to your loved ones? If you do not have life insurance coverage, they may be left with expensive medical bills to face, funeral expenses, and wondering how they are going to continue affording the lifestyle that your income provided to them. Life insurance coverage is important to the protection of your loved ones needs however understanding which type of life insurance policy to purchase can be a difficult process. Here we will discuss the different types of life insurance you can purchase and which option will be the best for your loved ones.

Whole Life Insurance

This type of insurance offers a set premium for the duration of the policy, which usually ends upon your death. It is designed to pay out a large cash value to your loved ones when you do pass away. It tends to be more expensive from other insurance options but this is due to the security that it does provide.  Unlike other policies, this policy never lapses and the money is guaranteed to go to your dependants. The plans are not as flexible as other plans are so you may not be able to increase or decrease the amount of your life insurance coverage. Anyone that needs to increase your coverage you should plan on getting a secondary policy. Since whole life insurance plans do provide you with more security from term life insurance you will end up paying more money for it.

Term Life Insurance

Out of all the insurance plans, this tends to be the most popular. It is very flexible and affordable for just about everyone. There are several tiers of insurance coverage that you can choose from. You may select the term length and coverage amount that will allow your family to maintain their standard of living in the event of your death. Other individuals will choose a policy that is based on a 10 year program or less in order to have coverage until the time of their retirement. Term life insurance is beneficial to individuals that would like to have benefits left behind for their children and they can choose to cancel it once their children move out and are no longer dependent upon their income. At the end of the term, your policy will lapse and you must choose to renew the policy. Depending upon age and health, the new term may be more expensive than what you were used to paying. Mortgage companies often request that you get term life insurance coverage that will be able to pay off your mortgage in the event of your death.

Universal Life Insurance

Individuals looking for a life insurance policy that is more of an investment may find great use out of a universal life insurance policy. This investment program allows you to have a savings vehicle attached to it as you are able to take a term life insurance policy and then have a tax-deferred interest savings account attached to it. The tax deferred money can be used to pay the premiums during the term of the insurance policy. The only individuals that really benefit from a universal life insurance policy are those in their retirement years. It is commonly used amount individuals in their 70s as it gives them savings in addition to life insurance to pay funeral expenses and medical bills. However some insurance companies have a cut off age of 69 as there is typically no need to have life insurance that late in life.

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