Why do you get life insurance? Basically, a person does such to make sure that their family or beneficiary will have financial security, in case of their sudden death.
What Type of Life Insurance Should You Get?
There are five types of life insurance. These are:
- Term life insurance. It only has coverage in a limited timeframe, normally 30 years as a maximum.
- Whole Life. This is also called permanent coverage as well. It guarantees insurance as long as the insured is still alive.
- Universal Life. It is a variation of whole life insurance where it has flexible or adjustable premiums. The premiums can be changed as the need arises.
- Variable Life Insurance. It is a combination of a traditional life insurance and savings but you have the option to invest your funds. This may be a bit risky because investing may affect the value of your funds.
- Variable Universal Life Insurance. Similar to variable life insurance, the only difference is that you can adjust your premiums and get a chance to select what to put in your investment portfolio.
What Are the Pros and Cons of Term Life Insurance?
The main benefit of Term Insurance is that it is the most affordable in most cases. It has a specific coverage period. The downside of it is that there is no cash value in the policy. The premiums do not accumulate or earn any interest. There could be a chance of having your policy denied if you would like to continue your coverage, and if approved, there can be a risk of a higher premium.
There are three different categories of term life insurance and these are:
- Level term. The premium and death benefits stays the same for the entire term.
- Annual Renewable Term. The death benefit stays the same but the premium increases each year when the contract renews.
- Decreasing Term. The death benefit lowers, but the premium is still the same. When the death benefit becomes zero, the policy will end automatically.
What Are the Pros and Cons of Whole Life Insurance?
Most whole life insurance has a fixed rate for their death benefits and premiums. It is always guaranteed, including interest rates. The cash value is also tax-deferred and depending on your duration, you can be permitted to do loans or withdrawals that are not often allowed. Whole life insurance can be more expensive than others. There is no option to change your premiums. The interest rates can be lower with regards to cash value.
What Are the Pros and Cons of Universal Life Insurance?
Universal life insurance has the option to change your death benefits or get a loan. It has a cash component that can be used to stop your premium payments for short period of-time. It can be more expensive over time.
What Are the Pros and Cons of Variable Life Insurance and Variable Universal Life Insurance?
You would be able to acquire your minimum death benefit if you have regularly paid for the minimum premium. You also have the option to invest your cash-value. If you are good in investing, it can help you increase your earnings with those investments. The advantage of investment can also be a disadvantage. You could invest in a risky one or could decrease the investment value.
When choosing the life insurance for you, ask the following questions:
- What is your budget?
- How long do you need it?
- What is included in your coverage?
- How much is the maximum coverage you need?
- Who will be your beneficiary?
- How old are you?
There are different kinds of life insurance policies and each one has its own advantages and disadvantages. Find out about the bracket of their life insurance quotes and how it can be beneficial to you.
You just need to find out which one can fully met your financial needs on your situation. It is recommended to acquire an initial policy and have a supplemental one afterwards. Research life insurance companies, their plans and understand what each policy has to offer you and how you’d benefit in the future.
Getting a life insurance policy does not mean that it would solve all your financial needs. It takes a lot of planning, research and effort for you to be able to be financially capable. If you’re planning to get a life insurance policy, remember that the earlier you start, the more inexpensive it will be.