Are you among 50% of Americans with zero life insurance coverage? The risk of doing without is great and the benefits imperative. Life insurance is the best way to lessen the burden on your loved ones when the unavoidable happens.
Instead of fearing the future, prepare for it and make sure your loved ones are well taken care of by understanding the different types of life insurance.
Here is an easy guide to 3 different types of life insurance policies and what they offer.
Term Life Insurance
Term life insurance is temporary. It covers anywhere from 1, 5, 10, 15, 20, 25, or 30 years. It has a fixed death benefit and does not build cash value.
Term life insurance is a good fit for most people. It is simple and simply acts to replace your income when you die. Coverage amounts vary and will be decided between you and your insurance company; however, they can go into the millions.
A good rule of thumb is to purchase term life insurance for a length that covers your prime working years. This is helpful if you pass away early as it allows a spouse or children to meet immediate financial needs, such as paying off a mortgage, covering health expenses, or paying for children’s college.
While it is the cheapest life insurance policy, the con is that your beneficiaries won’t receive a payout if you outlive your policy.
Whole Life Insurance
Among the different types of life insurance, whole life insurance is a good fit for those able to afford a higher premium. It is also a simple, permanent, policy.
Whole life insurance is as basic as putting it in place and not worrying about it again (if you pay your premiums).
Generally, you set your premium, which will stay the same, and get a guaranteed rate of return on the policy’s cash value. Another benefit is that your death benefit amount will never change. This means your loved ones will know exactly what they will receive.
If you can afford the slightly higher premium, a whole life insurance policy is a great fit if you prefer simplicity.
Variable Life Insurance
Variable life insurance means you must have hands-on management of your policy. Based on the market, your cash value could change day-to-day.
Basically, variable life insurance is connected to investment accounts such as stocks and bonds. Most often their premiums are fixed. Fortunately, the death benefit is guaranteed no matter how the market does.
If your investments do well, you could see massive growth. Some insurers offer what is called a hybrid life insurance policy where they combine variable and universal life insurance. This is like variable life insurance but has adjustable premiums.
If you’re willing to put in the time and effort, variable life insurance can be lucrative.
Choosing from Different Types of Life Insurance Policies
Understanding the different types of life insurance policies doesn’t need to be daunting. Our team of experienced and professional advisors is here to help guide you in choosing the perfect life insurance policy to care for your family.
Rest easy and enjoy the confidence that you have great insurance. Contact us today at Tom Needham Insurance Agency for a life insurance quote.