There are several types of Life Insurance to choose from to fit your and/or your family’s needs:
- Term
- Permanent
- Whole
- Universal
- Survivorship
- Final Expense
- No Medical Exam
Term Life Insurance Policies
The most basic of life insurance that can be purchased because term life offers just death benefit protection only, without any cash builds up within the policy. As a result, term life insurance is often very affordable – especially for applicants who are younger and in good health at the time they apply for the coverage. Term life insurance coverage is purchased for a certain length of time, it could be a 5 year policy (short term policy) or for ten years, 15 years, 20 years, 25 years, 30 years ( longer terms)– and in some cases, even longer. Many of the best life insurance carriers also offer a 1-year renewable term life insurance option.
With a level term life insurance policy, the amount of the premium will remain the same throughout the period that the policy is in force. Provided that the insured survives the time period of the policy, and wishes to remain covered by life insurance, they will need to re-qualify for a new policy at their current age and health status. In some cases, a term life insurance policy may have an option to convert the coverage over into a permanent life insurance plan.
Permanent Life Insurance Coverage
Offers both death benefit protection and a cash value component. As long as the premium is paid, it doesn’t have a time limit like term insurance and is meant to last for the remainder of the insured’s lifetime. There are different types of permanent life insurance:
Whole Life Insurance Coverage
The simplest type is whole life insurance. The premium amount is locked in from the start of the policy and remains the same throughout its lifetime. This can be helpful for those who need to stick to a budget. In addition, if a person purchases a whole life policy at a very young age, they will still pay the same amount of premium when they get older – regardless of advancing age, or even an adverse health issue. The cash value component of a whole life insurance policy is allowed to grow on a tax-deferred basis. The gain on these funds are able to compound over time because they are not taxed. Initially, the early premium dollars will go towards paying the agent’s commission and the insurance costs. Then, over time, the cash in a whole life policy can grow, many times with a minimum guaranteed rate of return.
Universal Life Insurance Coverage
Is another form of permanent coverage. It also provides a death benefit and a cash value component where the funds are allowed to grow tax-deferred. Universal life insurance has more flexibility than whole life. Within certain guidelines, the policyholder can decide how much of his or her premium dollars will go towards the policy’s death benefit, and how much will go towards the policy’s cash value. Since it is a permanent life insurance policy, the cash value account will be available to the policyholder. The cash can be borrowed or withdrawn for any reason.
Survivorship Life Insurance Coverage
With this insurance policy, more than one person is covered. These policies can be set up in a few different ways. One of the ways the coverage is designed to pay out is when the first person passes away.The premium that is charged for this type of policy can be higher than for a policy on just one insured. But many times, it can be less than purchasing two separate life insurance policies. With joint and survivor, or last to die life insurance policies, the coverage pays out when the second person on the coverage passes away. These can either be term or permanent coverage. These policies have other advantages in that they usually will cost less than purchasing two separate life insurance policies, and they may have less strict underwriting criteria – especially if one of the individuals is in excellent health.
Final Expense Life Insurance Coverage
Or burial insurance, is purchased by those who are between the ages of 50 and 85. It is suited for those who want to ensure that their loved ones will not be burdened with the high cost of a funeral and related expenses such as a headstone, burial and memorial service. The average cost of such items nationwide can be in the range of $10,000 – an amount that many families just simply do not have readily available. So, a final expense life insurance policy can help. Final expense coverage can be either term or permanent – and often the underwriting requirements are not stringent. Though the applicants are usually older, the premiums are usually not high.
No Exam Life Insurance Coverage
Does not require that an applicant undergo a medical examination as a part of the underwriting process. Often, when applying for life insurance, individuals must meet with a paramedical professional who will ask them in-depth health questions and will also take both a blood and a urine sample. Those who have certain types of adverse health conditions may be denied for the life insurance that they need. With no medical exam coverage they could be approved, many times within a day or two after their application, for the coverage.
Choose Wisely
A number of life insurance options are available, and what’s right for you may not reflect what’s right for someone else. Taking time to learn what each type of policy offers can ensure that you choose a policy that’s best suited to your long-term needs and financial situation.