4 Types of Life Insurance Explained
4 Types of Life Insurance Explained.
Life insurance provides financial protection to your loved ones when you pass away. When you have life insurance, your beneficiary will receive funds from your policy to cover your funeral costs, debts, mortgage or other expenses. This coverage can make all the difference during a difficult time.
The life insurance policy that you choose will depend on your age, health, lifestyle, and your financial goals. In this article, we list the most common types of life insurance and offer some suggestions for finding the best coverage for you and your loved ones.
4 Types of Life Insurance Explained
Term Life Insurance
With term life, you’re “renting” life insurance coverage for a set period. For example, if you purchase a 20-year term life policy for a face value of $50,000, pay your premiums on time, and pass away after 15 years, your chosen beneficiary will receive a death benefit of $50,000.
Your beneficiary will be able to decide how the money from your death benefit is spent; this money could go towards funeral and burial costs, remaining mortgage expenses, funding your child’s college education, or donating to a local charity. If you pass away after your term expires, then you simply part ways with the insurance carrier.
At the end of your term, the goal is that you’ll no longer need life insurance coverage. If you end up needing continued coverage, many insurance companies offer the option to convert your policy into permanent life insurance (this will probably increase your monthly premium but is a good option for many people).
ALSO CHECK: Best Homeowners Insurance Companies 2022
Mortgage Protection Insurance
Many people choose mortgage protection for the peace of mind it offers. With this type of financial protection, you can ensure that your mortgage payments wouldn’t burden loved ones if you were to pass away or face income loss due to a critical illness or disability.
Whole Life Insurance
Whole life insurance, also called permanent life insurance, is designed to last until you pass away. Whole life policies have fixed premiums for the lifetime of the policy and they are most attractive because they guarantee a death benefit and come with a built-in cash value. If you pay your monthly premiums, your policy will stay active, and when you pass away your chosen beneficiary will receive a death benefit.
Universal Life Insurance
Universal life insurance is a type of permanent life insurance that lasts a lifetime. This policy is generally more affordable compared to other permanent life insurance options. It also includes a cash value savings component that can be used to fund your children’s education and supplement retirement income.
The policy’s cash value accumulates interest over the years, and you can even borrow from the cash value after a certain number of years have passed. If you are unable to make your premium payment, there is some flexibility in this policy so you can use the cash value to cover payments.
If you are looking for reliable life insurance coverage, there are plenty of options available for you to consider. Based on your current lifestyle and financial situation, we can help you find a perfect match.
If you are ready to get coverage now, Quility’s online application for term life insurance takes less than ten minutes. Still wondering which type of life insurance best fits your needs? We can help with that too. Chat with an advisor today to get customized options fit for your budget.
This article is for educational purposes only and is not intended to provide, and should not be relied on for, financial advice.