Life is unpredictable, and hence everyone should plan ahead.
We all love our families, and we want to live with a guarantee or promise that our families would stay safe and happy even after we’re gone. Living everyday fearing what would happen to our family would make us destroy the present moments that we can enjoy.
In order to have that kind of mental peace, one must search for best type of life insurance to suit their families, lifestyles, and needs.
There are five main types of life insurance policies, but we will talk in depth about three that are the most popular.
- Whole life insurance policies offer permanent insurance coverage that remains valid throughout a person’s life. Besides that, it offers guaranteed cash value and premiums.
- Term life insurance policies cover you for a predefined time span generally 10, 15, 20, or 30 years. Moreover, in this type of life insurance policy, the coverage expires once the policy does.
- Universal life insurance policy not only provides cash value and permanent coverage, but it also offers investing opportunities, death benefits, and flexibility in premiums.
In order to decide the best type of life insurance for you, you must evaluate your life goals, your needs, and your budget. It might be that your portfolio is suitable for several types of life insurance, or it might be that it matches only one type of life insurance policy. Honestly, the best type of life insurance would vary from person to person.
Many people ask what is required of them to get the coverage. Well, the answer is crystal clear. You just have to take a medical exam. A medical exam? You may ask, but why? Well, just to save you some money and get you better coverage. Let us explain.
The insurer agrees to take upon the financial burden of your death by way of an agreement with you. You pay premium and he gives your family the predefined death benefit.
The insurer would pay for your medical exam to measure the risk of your death in order to set a premium price. The higher the risk of your death, the more the premium you will be required to pay.
If you are in good health, the insurers will give you a better premium rate.
You can also opt for the no exam policy but that will probably cost you more as the insurer would not have all the information required for him to assess risk.
Let’s look at the three main types of life insurance policies in detail.
Term Life Insurance
Term life insurance policy is great value for your money. It provides people with exactly what they need. It is affordable and can match most people’s budget.
It is a very straightforward and simple life insurance policy that asks for low premium payments for life insurance coverage that ends after a specific time frame.
People generally choose 10, 15, 20, 25, or 30 year terms to support their children or pay their final mortgage payments.
Choosing the term carefully can prevent your family from having to pay hefty bills after your life ends.
By opting for the term suitable for your needs, goals, and budget, you will actually protect your loved ones during risky times.
The disadvantage is that as term life insurance closes after a particular time frame, many people stay alive longer than that time.
If you check the facts, you will know that term life policies only cover for 1% to 5% of people.
You have to purchase ROP (Return of Premium) rider to get those premiums back.
Check out these lifestyle choices that could negative impact your term life insurance.
Whole Life Insurance
Whole life insurance covers you for your entire life and unlike term life insurance policy it doesn’t end after a particular time frame. However, whole life insurance policy can be more complicated than term life insurance policy. Some people treat this particular policy as an investment. Whole life insurance is like a permanent life insurance policy and grows to pay you cash value as you pay your premiums.
You can easily compare term life insurance and whole life insurance rates.
Whole life premiums are much higher than the premiums charged for term life policy. You may ask Why is whole life insurance more expensive in terms of premium? Well, it’s because it is for your entire life and the premium is locked at the same rate permanently.
If you cancel the policy, you will be taxed on the amount that you paid.
Universal Life Insurance
Just like whole life, universal life builds cash value. However, with universal life insurance policies you can enjoy more flexibility. But of course, more flexibility means you will have to pay a higher premium and face a higher risk in terms of investment.
There’s a catch: you can adjust your premiums and death benefit as necessary. You have full liberty to choose where and how to invest your cash value.
Even though universal life insurance policy is considered as permanent life insurance, some universal policies may not cover you for your entire life. These policies mature as you reach the age of 95, 110, and 121, and then pay out a lump sum cash amount. You don’t necessarily have to die.
When you outlive universal life insurance policy, you are in for a treat. You can enjoy a carefree retirement by outliving a universal life insurance policy.
If you have found yourself searching for a qualified insurance agent, having years of experience in the field of life insurance, visit Pawson. The company offers various forms of life insurance policies, which include whole life insurance, term life insurance, guaranteed acceptance life insurance, universal life insurance, and variable universal life.
To know about the rest of their policies, contact them at 203-481-8898.
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