Basic Types Of Life Insurance And The Best Time To Buy Them

Basic Types of Life Insurance and the Best Time to Buy Them

Life insurance is one of the most important parts of every home and family in order to have a secure future. When people think of insurance, they do not understand the different kinds of insurance policies available and the requirements to get each of them. Yet, this can get quite overwhelming for people even with the amount of information available on the Internet. The easier the agency, the quicker and more easily does the customer find the right policy. People are skeptical when it comes to life insurance but if you’re armed with the right information, then it’s easier for you to not be fooled by fraudulent agents. There are different kinds of life insurance policies and each can be customized and tailor-fitted to suit the customer’s requirement. There are a wide variety of insurance policies these days, and some can be customized based on the flexibility of provider and insurance company.

Term life insurance
The policy is taken for a time period of anywhere between 5 and 30 years. Once the term expires, you can claim your premium. Owing to your death before the policy expires, they will pay death benefits to the beneficiaries mentioned. Term policies are like monthly installments. You pay a $30 to $50 every month for a maximum coverage of $500,000. Death benefits are as low as $5,000 to as high as $500,000 based on the needs. This is the most affordable life insurance policy. Term life insurance is categorized into three types: level term, wherein your premium and death benefit remains the same for any period of time; annual renewable term insurance, wherein the death benefit is the same but the contract is annually renewed and premium increases each year (these can get expensive); and decreasing term, wherein the premium remains the same but the policy ends as the death benefit ends, this can be taken any time after the birth of a person.

Whole life insurance
This type of insurance has death benefits with a cash value, wherein the premiums you pay every year or as monthly installments are to fund the cash value. For maintenance of death benefits, a major chunk of the amount goes. Whole life insurance costs you 10 times more than term insurance. As long as you pay the premiums, the whole life insurance will last. Toward the end, you might have a good cash value to pursue a loan for any purpose like home loans, educations, and assets.

Universal life insurance
This kind of insurance covers an entire lifetime and is related to cash value. Cash account earns interest and tax can be deducted in this case definitely because you are not just selecting the specific term, but a part of your premium goes into the cash account. Universal life insurance offers much more flexibility than whole life and term life insurance. As long as cash value covers the insurance costs, you can reduce or completely stop premium payments. Cons include the high cost and increase in rates of premium. Financial professionals do not recommend this much due to the difference in investing.

Variable life insurance
Variable life insurance policy helps you to tie your cash value to investment accounts. You can adjust your cash on bonds, mutual funds, equity, stocks, money market etc. There is a level of high risk involved based on the market, which allows partial withdrawal of cash or any loans you take against it. Advantages of variable life insurance include a proprietary gain in cash value and allowing withdrawals of anything against it. Disadvantages include the requirement of hands-on management of the policy, the varied cash value based on the money market then and there, and administrative charges that are removed from payment not allowing it to move to cash value.

Survivorship life insurance
This is the policy that works as a death benefit and helps the beneficiaries listed out in the will. Coverage is designed to help beneficiaries when the first beneficiary dies. It costs three-fourth of the amount of buying two life insurance policies and has a much higher premium than two life insurance policies. Joint insurance, survivor insurance, and last-to-die insurance are its various types. It is based on the “first come, first dead” basis, which helps the beneficiaries if they are in dire need. They have less strict underwriting rules.

Final Expense Life Insurance
This policy is purchased by customers between the ages of 50 years and the age of 85 years. The main purpose of this policy is to help those seniors who want their loved ones to stay safe after their death especially to help oneself out during their burial, death expenses and other related services like memorial service and flowers to the adornment. Many families find it tough to spend $10,000, which is the minimal amount for a memorial service. In such cases, final expense life insurance policy helps. Underwriting rules are not strict hence it can be termed as permanent or term based on requirements.

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