Life insurance is one of the most important pieces to life’s puzzle. In this unpredictable world the only realism that is guaranteed is death! However, there are some life insurance policies that can provide benefits while you are living.
Life insurance covers the cost of a deceased loved ones final expense and burial. It also provides extra financial security for the families left behind.
Types of Life Insurance
There are various types of Life Insurance, such as Whole Life, Term Life, Universal Life and one of the newest on the market, Indexed Universal Life, just to name a few.
Whole Life Insurance
A Whole Life policy normally covers final expenses or burial expenses of a deceased loved one. However, it can also be very beneficial while you’re living. Whole life policies generally provide smaller death benefit but builds a moderate cash value. While the premiums for a Whole Life policy are a little more expensive in comparison, it builds a higher cash value, which you can borrow from.
Term Life Insurance
Term Life policies are the least expensive policies, providing a higher death benefit for a cheaper premium and do not build cash value. These policies provide coverage for a specified number of years; when the term expires most policies will allow you to either renew the policy at a higher premium or convert it to a different type of life policy. These policies are often used for mortgage coverage, college coverage and/or Keyman/Business coverage.
Universal Life Insurance
Universal Life Policies are the most flexible. They come in many different shapes and sizes and house a variance of coverage types, such as Guaranteed Universal Life, Accumulator Universal Life, and Index Universal Life. They generally provide coverage for both final expenses and family support but, can also be most beneficial while enjoying the thrills of life.
- Guaranteed Universal Life: Provides death benefit, builds little cash value and allows you to pay a minimum premium. It builds a minimum cash value but is guaranteed renewable for life as long as you pay your premiums.
- Accumulator Universal Life: Operates the same as a Guaranteed Universal Life, except it provides a higher interest rate, therefore building a much greater cash value.
- Index Universal Life: Gives you flexibility in allocating the cash value to either a normal fixed account or an equity index account, which is based on the performance of the S&P 500 on Nasdaq 100. This alone causes these types of policies to be more volatile than the Guaranteed Universal Life and the Accumulator Life. Index Universal Life’s usually offer a guaranteed minimum fixed interest rate and a choice of indexes.
Most Life Insurance contacts either include certain riders or allows you to attach riders at an additional cost.
While this article touches on the basics of some of the more popular life products, there are a few others which could be a better fit for you, your loved ones or your business. If you’d like to learn more about the benefits of life insurance and how it can affect you and your family, please contact our office for a one-on-one consultation with one of our skilled agents.