When thinking about Life Insurance its important to understand what each policy covers. Listed below are the most common types of Life Insurance you’ll need.
Term Life Insurance
The two most common types of Life Insurance are Term Life Insurance and Whole Life Insurance. Term Life Insurance provides protection for a designated amount of time and will typically costs less than Whole Life Insurance. Once this insurance reaches its term, it will expire, but you can change this policy to a permanent policy. This type of policy covers the event of your death where an allotted sum of money goes to your beneficiaries. This sum of money can be received all at once, in monthly payments or towards and annuity. Most people prefer the money they receive in a lump sum.
Whole Life Insurance
Whole Life Insurance not only has death benefits but also provides a cash value where the premiums you pay monthly or annually are partially used towards that cash value. When paying your premium, most of it goes towards fees and maintaining the death benefit in the beginning but over time the fees decrease and more of your premium will go towards funding your cash value. Whole Life Insurance remains in term as long as you pay your premium. Some things to consider when thinking about Whole Life Insurance are the costs difference between whole and term insurance, surrender fees, taxes,interest and whether Whole Life Insurance can serve as an investment for you.
Universal Life Insurance
Universal life insurance can be seen as confusing as it has a few twists and turns. Like a Whole Life Insurance policy it has a cash value with premiums going towards the cash value and death benefit. The twist however, it that policyholders of Universal Life Insurance have flexible premiums and can even change the death benefit amounts without getting a new policy. If enough money has accrued towards your cash value, you can use this sum to go towards your premium. If your cash value has enough, you can skip premium payments altogether, allowing the accrued interest to do the work.
The other twist that comes with Universal Life Insurance is that these policies cash values have an interest rate that adjusts with the current market rates. If the interest rate being credited to your policy decreases to the minimum rate, your premium would have to increase to offset the reduced cash value. Another thing to consider it that you can adjust your death benefit within the limits of your policy but it may make it subject to further underwriting along with fees. The ability to change the death benefit amount within your policy can be appealing, especially if something changes with your financial situation. Having flexibility within your policy is an attractive component but it’s worth noting that there are complexities with changes which often come with added costs. fe has just what your looking for. Call us today and we will help you protect one of your greatest investments.