Are you looking to purchase life insurance, but aren’t sure which kind to buy?
Life insurance can help protect your family in the event that you die unexpectedly. But, before you purchase life insurance, it’s important to know about the different types out there.
Check out this guide to learn about the different types of life insurance.
Term Life Insurance
Term life insurance is the simplest and most affordable type of life insurance you can purchase. This is because this type of life insurance only takes care of one thing: paying the people you choose a select amount of money should you die.
Who your money goes to is up to your choosing- many people choose to give their money to their spouse, children, or other beneficiaries. However, the term life insurance policy isn’t worth anything unless you pass away during the course of the term.
Basically, it’s a way to proactively take care of your loved ones so they don’t have to worry about their finances should you pass.
Permanent Life Insurance
Permanent life insurance is a bit more complicated than term life insurance. Permanent life insurance does the same thing that term life insurance does- it provides your beneficiaries money in the event of your death.
But, it’s also an investment account. This type of policy includes something called a “cash value”, which is basically a savings account into which you deposit money every month. The longer you have your permanent life insurance policy, the more cash value the policy has.
Another difference between term and permanent life insurance policies is that, as the name suggests, permanent life insurance policies don’t expire. They keep going until you die or until you stop paying your premium.
Whole Life Insurance
With a whole life insurance policy, you lock in a premium amount for as long as you want to keep the policy. Each month, you pay your insurance company your premium.
A portion of this premium goes toward your cash value and this amount grows over the whole life of your insurance policy. Hence the name, whole life insurance.
The longer you own your whole life insurance policy, the more cash value it has. Essentially, it’s a savings account. But, just keep in mind that the purpose of your life insurance is to pay your beneficiaries should you die.
This means that with whole life insurance, you end up paying more for less insurance. There’s also a type of whole life insurance known as straight life insurance. You can click here to learn more about a straight life policy.
Universal Life Insurance
Universal life insurance comes with both a cash value and a death benefit. However, unlike whole life insurance policies, universal life insurance policies come with adjustable premiums.
However, this doesn’t mean you’re off the hook when it comes to paying the minimum premium to maintain your policy. However, you might be able to eliminate a premium payment depending on your cash value.
Or, you could leave things as they are and rack up some cash value over time.
Types of Life Insurance: Which Type is Right for You?
Now that you know about the different types of life insurance, it’s time to decide which type is right for you. With the right life insurance policy, you’ll be at peace knowing that your family is protected.
Be sure to check back in with our blog for more tips on buying insurance.