According to studies, only 54% of American citizens have life insurance.
People are telling you that you need life insurance. What do you do now?
Figuring out what type of life insurance policy is best for you can be confusing and time-consuming. There are so many different policies to choose from, and it can be hard to know which one is right for you.
But don’t worry. Keep reading our guide to the types of life insurance policies that will make the process easier for you!
Term Life Insurance
This type covers your death and pays your beneficiary the face value of the policy, and it will be paid in full even if you die soon after acquiring it. However, term life insurance has no savings component.
Term life insurance is less expensive than other types of life insurance. There is no savings element, so it provides limited coverage against various risks like disability and long-term care.
It can also cover your family’s financial needs if you die. You can purchase Term life insurance at most any age, but rates usually increase with age and health status for people over 50, 60, or 70 years old.
Universal Life Insurance
This type of life insurance policy lets you pay premiums for a few years, or for your whole life. The cost is more than term life insurance because with universal policies there is a cash investment that earns interest.
You can use these savings to buy paid-up additions (PUAs). These add to the face amount of the policy, but they also reduce the death benefit if you die soon after getting the policy.
Universal life policies may come with riders such as critical illness plans and living benefits, which provide additional coverage in case of disability and/or long-term care needs.
Whole Life Insurance
Whole life insurance is designed to accumulate savings over the policy’s term. This type of policy always keeps its original face amount, but it generally costs more than universal life policies.
Whole life insurance can’t be cashed out if you stop making premium payments, so the policy includes protection against lapses. This is important to remember when trying to pay off the policy.
Variable Life Insurance
This life insurance policy has a high death benefit and you can use it to protect your family’s finances if you die. But it also lets investors put their money into different investments that might make more money.
You get to choose how the money is put into different investments, in lots of different places.
Group Life Insurance
This type of policy is a whole life plan that offers coverage to a large group of people. A group term life insurance employee benefit will have the same characteristics as any other whole life insurance.
You’ll need to pay premiums your entire lifetime and your beneficiary won’t receive death benefits if you die prematurely.
Additionally, a group whole life insurance policy may include coverage for permanent disability and/or long-term care needs, but this varies from one company’s policies to another.
Explore the Different Types of Life Insurance Policies
So, what type of life insurance policy is best for you? That’s a question that can only be answered by taking a looking at your unique situation.
However, our guide to the types of life insurance policies should give you a good starting point.
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