Types of Insurance
There are two basic types of insurance: term insurance and cash value insurance. One type of insurance is not necessarily better than the other; rather, better for certain people and stages in life. Let's take a minute and compare the two types insurance policies.
Term Insurance
Term life insurance is usually the best bang for your buck when it comes to value. You can get more coverage for less money. The policy is guaranteed for a fixed period of time ranging from 1 year to 30 years. If you die at any time during the period of your term, your death benfit will pay to your beneficiary.
With many term life policies you can renew your coverage or convert it to cash value insurance. Keep in mind that if you renew or convert, your premiums will most likely be higher.
Benefits:
With many term life policies you can renew your coverage or convert it to cash value insurance. Keep in mind that if you renew or convert, your premiums will most likely be higher.
Benefits:
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Disadvantages:
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Cash Value Insurance
Cash value life insurance is typically more costly than term life because they build cash value. Cash value is an accumulation of cash that a policy holder can access in several ways while he/she is alive. Policy owners can borrow the cash but interest will by charged by the company and if the insured passes away while a loan is in effect, the death benefit will be reduced by the value of the loan. Cash value can also be used to make premium payments on the policy of the insured if the insured is unable to pay.
Cash value policies include but are not limited to the following:
Cash value policies include but are not limited to the following:
- Whole Life
- Simplified Issue Whole Life
- Universal Life
- Variable Life
Whole Life
Whole life policies cover an insured for their 'whole life.' Premiums do not increase, death benefits typically do not reduce and the policy does not cancel as long as the premium payments are made. Premiums charged for whole life policies can be significantly more than an equal benefit term life product because of the permanent, cash value benefits. However, the premium payment for whole life coverage will be smaller in the long run compared to cost to renew term life products at the end of each term period.
Within the whole life policy family is another type of plan called a limited pay plan. These plans are whole life coverage with payments limited to certain number of years, typically 10 years, 20 years or to age 65. Payment on these plans are higher that regular whole life plans because of the shortened pay period.
Whole life policies cover an insured for their 'whole life.' Premiums do not increase, death benefits typically do not reduce and the policy does not cancel as long as the premium payments are made. Premiums charged for whole life policies can be significantly more than an equal benefit term life product because of the permanent, cash value benefits. However, the premium payment for whole life coverage will be smaller in the long run compared to cost to renew term life products at the end of each term period.
Within the whole life policy family is another type of plan called a limited pay plan. These plans are whole life coverage with payments limited to certain number of years, typically 10 years, 20 years or to age 65. Payment on these plans are higher that regular whole life plans because of the shortened pay period.
Simplified Issue Whole Life (No health exam)
Simplified Issue Whole Life insurance is specifically designed for senior citizens who
Simplified Issue Whole Life insurance is specifically designed for senior citizens who
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Term Insurance
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Cash Value
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