Life is full of surprises. They always come at a time that’s but unexpected and inconvenient.
There’s one such a surprise that no one can escape: passing away.
When that happens, especially when it’s sudden and unexpected, it can be a detriment to the entire family’s financial situation.
That’s when it’s comforting to know that your loved ones are protected from your passing in the form of substantial life insurance.
However, not many people realize that there are several different forms.
Here are the different types of life insurance and a brief example of what each of them looks like.
1. Term Life Insurance
This type of life insurance is set up the way its title implies. You set up a life insurance policy for a certain amount of years. Meaning that this form of insurance has an expiration date.
If you were to pass away within the number of years (term) of the term life insurance, then your noted beneficiary would be awarded the agreed amount.
This type of life insurance is the most affordable because of its low monthly rates while still offering up to 30 years of coverage.
2. Whole Life Insurance
In the opposing corner of term life insurance, you have what’s called whole life insurance. Once again, as the name implies, this type of life insurance has no expiration date.
While it is considerably more expensive than term life insurance, you’ll be covered for your entire life.
Whenever you end up passing away, your loved ones will be covered when they need it most.
Better yet, everything listed out in the policy stays the same no matter when you die. Your beneficiaries will get the same death benefit amount whether you die 10 years from now or 40 years from now.
3. Universal Life Insurance
This type of life insurance is similar to whole life insurance in a lot of different ways, but cheaper.
The premiums that you pay will go directly to the cash value and the benefit your beneficiaries receive once you pass.
Even better, you can change the premium amount and death benefit amounts while keeping the same policy you’ve been paying towards. It’s perfect for those times in life where circumstances change.
You can also use the cash value that you’ve accrued to pay your premium, so you could end up with an amount where you no longer need to pay your premium.
4. Variable Life Insurance
Do you like mixing in a touch of investing in the financial avenues you choose? If so, then variable life insurance might be a consideration for you.
Essentially, variable life insurance has cash value (like whole life insurance) except the money that you pay towards it is thrown into a mutual fund. In other words, it’s placed into the stock market and your results are then dependant on how it fares.
One catch that most people aren’t aware of is that you only have a select number of sub-accounts that are available to invest in with variable life insurance.
You won’t be able to just place it into any mutual fund that you’d like to. Your options are limited in that regard.
5. Variable Universal Life Insurance
Time to mix number 3 with number 4 on this list and see what comes out the other end: variable universal life insurance.
This policy takes out the flexibility of universal life policy and mixes it with the high-risk-high-reward aspect of a variable life policy.
In that, you can switch out the amount of the premium and death benefits at any time while you continue to invest. Then you can also invest that cash value into mutual funs that are made available to you.
6. Final Expense Insurance
Your one concern with the term life insurance policy is probably “what if I live past the expiration of my policy?”.
If that were to happen, then you always have other options available to you.
The top priority for you is going to be covering any and all expenses associated with your death such as your funeral, medical expenses, and burial preference. That way your loved ones aren’t forced to pay out of pocket.
Enter the final expense insurance option, which was created to help with this exact problem: older people that don’t currently have a life insurance policy.
Granted, it will be a higher premium (for obvious reasons). But it can be a great option for those out there that have procrastinated on life insurance coverage for far too long.
7. Group Life Insurance
This type of coverage is mostly associated when an employer offers a life insurance option to its employees.
While this can be a great way to get started if you don’t currently have coverage, it shouldn’t be the only life insurance you have
The coverage amount more than likely won’t be near the amount your family needs in a time of crisis. Not when you consider all the costs associated with death for your loved ones to deal with.
Explore All These Types of Life Insurance
Now that you’ve read up a bit about the different types of life insurance, it’s time to find the right fit for your needs.
Your circumstances are unique to you. Make sure that you’re lining yourself (and your loved ones) up with the right coverage you’ll need.
Be sure to read this article on how life insurance works for more information regarding the process of investing.
For more inquiries, feel free to reach out to us via our contact us page and we’ll be happy to discuss things with you further!
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