What’s the hardest decision you’ve had to make recently? If you’ve had to decide on a life insurance policy lately, that probably tops your list of tough choices. It’s a decision that is both very important and highly complex.
Life insurance helps protect your loved ones, so it’s not a decision to be made lightly. That said, it’s also a very complicated subject, with tons of different options; how do you find the right one for you?
The first step is to learn about the different types of life insurance available. Keep reading to find out about your life insurance options.
Main Types of Life Insurance
Despite its importance, around 40% of Americans don’t have life insurance. In fact, many of those people don’t even know if they have life insurance or not. That may be because of how confusing life insurance can seem.
At root, there are two main kinds of life insurance: term life insurance and permanent life insurance.
Term life insurance only offers coverage for a certain number of years (hence the name). Premiums are paid for the length of the term, with a payout if the insured person dies during the coverage term–but not if they die afterward.
Permanent life insurance, on the other hand, doesn’t expire at the end of a term. It has a cash value that grows over time as long as you maintain your policy.
There are benefits and drawbacks to each kind of life insurance policy.
Term Life Insurance
Term life insurance is often considered the best life insurance for very young, healthy people. This is largely because of how affordable it is. The younger and healthier you are, the better deal you can get on this kind of insurance.
Most of the time, term life insurance involves paying a monthly premium that you don’t recover if you survive the policy’s term. However, there is a special kind of life insurance policy where this is not the case.
Return of premium life insurance actually returns your paid premium if the term expires. This prevents you from feeling like you wasted money on the policy, but it also means higher premiums throughout the term.
Permanent Life Insurance
Permanent life insurance is a bit more complex. The two primary kinds of permanent life insurance are whole life insurance and universal life insurance.
A whole life insurance policy involves paying a premium to maintain a cash value. This value pays out dividends, which you can access as you wish. You can also take out a loan using your whole life insurance policy.
Universal life insurance is very similar to a whole life policy. The main difference is that whole life policies have fixed premiums, while universal policies have flexible premiums.
Final Expense Insurance
Final life insurance is another kind of policy that doesn’t quite fit under the umbrella of term or permanent life insurance, though they can be thought of as a type of whole life policy.
Essentially, final expense insurance has very low premiums, but only pays out enough to cover funeral costs. It’s an excellent choice for people who don’t want to spend a lot on insurance but are still looking for a policy.
If you’re interested in selling life insurance, final expense insurance is a good place to start. Because of its broad appeal, selling final expense insurance is very appealing for many insurance agents.
Protecting the People You Care About
Knowing the different types of life insurance helps you make the best choice for you and your family. This ensures that no matter what happens, the people you love will be taken care of.
The healthier you are, the better your premiums, so check out our health and fitness page to stay in tip-top shape!
