Understanding the Types of Life Insurance
If you are the primary provider for your family or loved ones, life insurance is an important step in securing your family’s future needs. There are a few basic types of life insurance you can purchase. So, once you know how much you need, you will need to determine which type aligns.
Preparing to Purchase
Before you look at the different types of life insurance, you should understand what you need in a policy and what you can afford. There are many companies in the market, so finding one that offers a policy to fit your needs can sometimes be difficult. Figure out how much coverage you need to cover your debt and cost of living for your family before setting off to review policies. It’s also smart to have an idea of how much you can afford to pay each month or year for your policy premium.
The Cheapest: Term Life
Of all the types of life insurance available, term life insurance is the most affordable and most commonly purchased. There are two types – fixed term insurance and decreasing term insurance. Fixed term insurance allows you to purchase coverage for a set period of time with a fixed monthly rate. Decreasing term insurance is the most popular choice, and it allows your monthly premium payment to decrease over time.
Cover Your Entire Life
Another popular choice in the types of life insurance policies is whole life insurance, which covers your entire life span. Some companies offer whole life insurance that allows you to stop paying premiums once you reach a specific age, but your coverage will continue. Whole life is more comprehensive than term life and offers a cash value on your policy, which means you can surrender the policy and receive the payout.
Life Insurance and Investment
As one of the types of life insurance available, universal life insurance is similar to whole life insurance, but it also offers an investment option. With universal life, you can earn interest if you pay above the monthly premium. You may also find policies with flexible payment plans and coverage.
Understand the Variables
There are two types of life insurance when it comes to variable life insurance – variable universal and variable whole. Variable life insurance provides permanent protection for your beneficiaries. Variable life is typically the most expensive life insurance because it allows you to put part of your premium payment into separate investments, such as stocks or money market funds, which can offer potential investment risks.
Making the Choice
It is wise to understand your family’s financial needs when looking at the types of life insurance available. The internet is a great place to search and compare quotes before making a decision.
There are pros and cons to the various types of life insurance available. Yet, purchasing a life insurance policy is a smart choice in securing your family or loved one’s financial future.