When shopping for and comparing life insurance policies, you should know the various options available. Policies are available for every financial situation, whether you need affordable life insurance coverage for your working years or a high-net-worth individual looking to leave your successors a tax-free inheritance.
Let’s examine the various life insurance options in this guide so you can decide which one might be the best for you.
Term Life Insurance
Term life insurance is the most fundamental type of life insurance protection. Term life insurance typically entails paying a set premium in exchange for a fixed term’s coverage. If a person passes away while the term of their policy is still active, their family will receive the fixed death benefit amount.
Term life insurance coverage is typically the least expensive because it has a start and an end date. However, once the term expires, the coverage also ends.
Whole Life Insurance
Whole life insurance is a type of permanent coverage that lasts for the rest of your life. Whole life insurance is more expensive than term life insurance. However, its lifetime benefit can provide consumers with greater peace of mind.
Whole life insurance premiums typically remain constant throughout the policy. The beneficiaries receive a guaranteed fixed benefit amount upon the insurer’s demise.
Universal Life Insurance
This permanent coverage combines a death benefit with a cash value component. Customers with universal life insurance can borrow against their policy’s cash value, but they can also withdraw funds over time.
This type of coverage also provides some premium flexibility. If you are in good health, some companies will allow you to adjust the death benefit on your universal life insurance policy over time.
Variable Life Insurance
Variable life insurance is a type of permanent coverage that includes a death benefit and a savings component. The main distinction is that your insurance company typically invests premiums on variable life policies in stocks, bonds, and money market funds to receive a higher return.
This type of coverage is generally riskier. Taking on more risk, on the other hand, offers the possibility of higher returns.
Group Life Insurance
Group life insurance can take many forms and cover any life insurance. Group life insurance is marketed and sold to an entire group at once, typically a company’s employees. The group can obtain coverage without undergoing individual medical exams.
Depending on where you work, you may be entitled to free group life insurance as an employee benefit. However, the benefit amount is typically low, so if you require a higher level of protection, you should supplement any group life insurance coverage with additional coverage.
Family Life Insurance
Family life insurance policies typically include both whole and term life insurance coverage for the family’s primary breadwinner, spouse, and children. Policies typically include varying benefit amounts for different family members, ensuring that there is adequate coverage regardless of which family member dies.
