The Different Types of Life Insurance

 

life insurance, life insurance quotes, term life insurance, universal life insurance, whole life insuranceThe following is a guest post. Enjoy!

There are many different types of life insurance, and it can be confusing to navigate through all the options. If you’re thinking about life insurance, you’ve already made the important step of planning for your family’s future. You know the importance of making sure they are taken care of after you’re gone. But, with all the options, it can be confusing.

 Here are the main types of life insurance policies, and what you need to know about each.

 

Term Life Insurance

Term life insurance is one of the more basic types of insurance, but it is also one of the most popular. Term insurance provides life insurance coverage for a specific term (10, 20, or 30 years usually).

Term life insurance has three variables: the face amount (or death benefit), the premium to be paid, and the length of coverage. It is the most “pure” type of life insurance policy.

 

Universal Life Insurance

Universal life insurance is intended to combine the permanent insurance coverage with greater flexibility in premium payments, and possibly greater growth of cash values. A universal life insurance policy includes a cash value, which can earn interest either decided by the company, or tied to some type of investment vehicle. Unlike whole life insurance, the premiums are death benefits are flexible, with a set minimum but the potential to be higher based on the cash value return.

 

Whole Life Insurance

Whole life insurance provides a lifetime death benefit for a level premium in most cases. The premiums are higher than term, but the policy provides a cash value reserve along with the policy. This cash value can be accessed through loans, and the income received from them is tax-free.

It is important to note that the cash value is actually part of the death benefit, and you can’t separate one from the other – so there is no bonus in having this type of policy other than possibly using the cash value for a loan at some point during your life.

How about you all? What type of life insurance do you prefer to carry?

Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/katie_cat/4856601471/sizes/l/in/photostream/

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