How To Decide On The Type Of Life Insurance To Choose From?

Type Of Life InsuranceWhen shopping around for life insurance , it is wise to keep in mind that there are various types of policies to select from, with policies differing in structure, cost, and other factors. The amount of the death benefit offered by various policies should also be considered, as well as how each type of life insurance works. So, how to decide on the type of life insurance to choose from? Follow these tips to help choose the right policy for you.

A whole life policy is the safest bet for providing guaranteed, permanent coverage for the lifetime of the policy holder. These policies also offer the added benefit of accruing a cash value to them as time goes by that the policy holder may be able to borrow from if needed at some point, without tax penalties.The only drawback to borrowing funds off of the policy is that the amount of death benefit will decrease until the amount of money borrowed on the policy is paid back. Premiums, as well as the set value of the benefit paid upon death tend to remain the same throughout the lifetime of the policy. This is also a good type of policy to purchase for a healthy, young child, in the event that the child would develop some type of serious health condition later in life that may prevent them from obtaining a life insurance policy of choice due to pre-existing conditions.

An adjustable life policy, also referred to as a Universal Life policy, works in a similar way as the Whole Life in that it provides lifelong coverage and possesses an actual cash value. A main difference between the two types is that certain terms of the policy such as cash values, premiums, and the amount of covered protection are able to be adjusted as circumstances change for the policy holder.

A Variable Life policy incorporates features of a whole life policy along with having the potential for growth through investment funds. This type of policy has a liability account along with an additional account made up of investment funds. Because of the investment feature associated with the Variable Life insurance policy, this can effect both the death benefit amount as well as the cash value of the policy, as the amounts may fluctuate and change.

Another offering in life insurance is the Variable Universal Life option, that is a combination of the features of a universal life and variable life policy. This type of policy gives the policy holder various options, such as the ability to make adjustments to premiums, select investment benefits, and set the amount of death benefits. Because these types of accounts are treated as securities, they are regulated by the Security and Exchange Commission and may be riskier than other types of life insurance policies because of the investment factor.

Many people opt for a Term Life policy that provides benefits to the policy holder’s beneficiaries in the even of death. The amount of the policy is paid to the beneficiaries at face value and premiums increase as the policy ages. Term Life polices are only good for a specified amount of time, generally a period of thirty years.

Determining how to decide on the type of life insurance to choose from is all a matter of understanding how different types of policies work, and then deciding which type best suits your needs.

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