Are you deciding if life insurance is right for you?
Millions of Americans are in the same boat. In fact, only 55% of U.S. adults have life insurance, while nearly 30% have policies that don’t suffice. Plus, 40% of policyholders regret not purchasing life insurance earlier in their lives.
The data above underscores the importance of having various life insurance options.
Learn more about the different types of life insurance available.
What Are the Main Kinds of Life Insurance?
For starters, there are two primary types of life insurance: term and whole life policies. Whole life plans are also called permanent insurance.
Term policies are considered the simplest form of life insurance. These straightforward policies only distribute funds in the event of a death. Yet, beneficiaries only receive payouts if the death occurs within the policy’s term window.
However, if you want coverage for the duration of your life, then you would purchase a whole life policy.
Types of Term Life Insurance
There are two primary types of term policies, whereas whole life purchasers have three primary options.
Level term policies are straightforward. The total benefit doesn’t adjust during the term.
However, if you buy a decreasing term life insurance plan, expect the benefit to decrease every year until the term is over.
Most term life insurance plans are level policies.
Primary Whole Life Insurance Options
Whole life insurance policies provide the most robust coverage.
Buyers have three main options:
- Regular whole life policies
- Universal life insurance
- Variable universal plans
Traditional whole life insurance buyers should expect consistent benefit increases. Even better, policyholders enjoy faster gains after turning 80 years old.
Purchasers pay higher premiums early in the plan. However, buyers don’t have to worry about skyrocketing premiums as they age. By overpaying premiums early, policyholders may cash out these payments if they discontinue coverage.
Understanding Universal Life Insurance
Universal life insurance is a newer variation of traditional whole life policies. You may also know this coverage as adjustable life insurance.
Every time you make a payment, a portion of the sum goes straight into an investment account. The interest amount generated from the sum is also added to your insurance account.
You also enjoy the benefit of adjusting the benefit if health outcomes change. However, adjusting claims may require additional medical documentation. Policyholders can reduce benefits to lower premiums too.
If you’re in a financial bind, you can borrow from your universal life insurance policy. However, you may be penalized for withdrawing too many times. Only borrow in extreme circumstances.
One of the biggest drawbacks of universal policies is fluctuating interest rates.
The market determines policy rates. Thus, if your life insurance portfolio is performing well on Wall Street, you enjoy greater savings. Unfortunately, the same cannot be said for poorly performing insurance policies.
Before choosing a policy, holders are encouraged to request a life insurance quote from a company directly. Requesting multiple quotes yield possibilities for low premiums, perks, and more.
Discover the Right Types of Life Insurance
Will a term life insurance policy be enough? Do you foresee any changes to your life plan?
Consider all variables when choosing a policy. Look deeply into all types of life insurance to discover the best option with the lowest rates.
Discover even more hidden gems in the blog!