It is estimated that only 54% of Americans have life insurance. Of this, 50% of people overestimate the cost of it. So what are the policies and options available to you?
Many of them can have excellent benefits for long-term savings as well as insurance. Read on as we give the types of life insurance you need to know.
Term Life Insurance
This type of life insurance runs for a specific amount of time. Generally, it is in terms of one year, then runs in multiples of five. If you have level premium insurance, the price is locked in for the term of the policy.
Term insurance is often the cheapest way to buy life insurance, particularly if you just want a one-year policy. The downside is that if you do tend to live the policy out, no one will get paid for the money you have put in.
Whole Life Insurance
Whole life insurance covers you for the entirety of your time on earth. As long as you pay your bill, benefits will be paid whenever you pass away.
Many of these will have a savings component. Part of your premium will pay into this and it will have a fixed interest rate. This will build cash value as time increases and is the reason whole life insurance tends to cost more.
This money can be withdrawn as a loan. Credit checks are not needed, as you are essentially taking money from yourself. Paying it back can be done with interest or if you pass away, it will be withdrawn from your payout.
Accumulated cash does not impact the payout amount either. When it equals your death benefit amount, the insurer will usually just pay out the coverage amount and terminate the contract. Paradigm Life has some excellent policies for whole life insurance.
Universal Life Insurance
Universal is a similar life insurance policy to a whole but offers more flexibility. You have the option to increase or decrease your death benefit and are even allowed to skip monthly premiums.
It also has a saving component that works differently. Firstly, it does not have a fixed interest rate. While you may get a minimum rate, it will vary over time.
The cash value of the universal policy can also grow to a zero-cost policy. This is when all premiums are paid from the value you have accrued.
Variable Life Insurance
Variable life insurance is built on two principles. The first is the face value death benefit, which is paid out upon your death.
The second is a variable cash value. When you take the policy, you choose what type of investments your money goes toward. Variable cash values you accrue can be part of your death benefit, unlike whole and universal policies.
Types of Life Insurance
Now you know the types of life insurance, check a range of insurers. Know your budget and long-term goals. From here, you should be able to negotiate a deal.
If you found this article informative and educating, we have many more to help. From finance to property, we can help your investments grow in the coming years.