There are many different life insurance plans available, but they can all be broken down into two broad classifications: term and permanent. A term life insurance policy protects for a specific period (say, ten years). During that period, should you pass away, your beneficiaries will receive a payout, but once the term has ended, you will either need to buy fresh insurance or go without.
Permanent life insurance offers lifetime protection in addition to a “cash value” aspect that can be used for a variety of purposes, such as saving for retirement or funding a child’s college education. On that note, let’s take a detailed look into the different types of life insurance.
Term Life Insurance
To put it simply, a term life insurance policy covers only a specific time. Term insurance offers protection for a predetermined timeframe, usually around 10 to 30 years. This type of coverage is commonly referred to as “pure life insurance” since, unlike whole life coverage, it does not accumulate cash value. Its main purpose is to provide financial security to your loved ones in the event of your untimely demise throughout the policy period.
With most term insurance for individuals, the monthly premium remains constant. Coverage ends at the end of the term, and you can go without protection or purchase a new plan at a higher rate the older you are.
Whole Life Policy
When it comes to permanent life insurance, the most basic option is a whole life policy, which protects the policyholder for their whole life. Similar to most permanent policies, it has a cash value element: a percentage of your premium payments are allocated to a dollar value account, where they increase over time without incurring any taxable profits.
Access to cash value has several important advantages that can be enjoyed while you are still alive. The money may take a while to grow to a sizeable sum. Still, once it does, you can utilize it in several ways, including as collateral for loans, funding for other expenses, or even a means of funding your retirement.
Universal Life Insurance
Another type of lifetime insurance that provides lifetime coverage and cash value is a universal life policy. However, the premiums are adaptable, which is a major difference from whole life insurance. The premiums you pay under a universal coverage can be adjusted up or down, within policy parameters, whenever you like.
It’s possible that if you pay less at the beginning, you’ll have to pay more later on to preserve the same level of coverage. The cash value grows at the same rate as whole-life policies, but the policy can be adjusted to fit your changing needs. Many life events could necessitate the need for both stability and adaptability, such as adding a new kid to the family, changing careers, or securing a loan to acquire a business.
Final Expense Insurance
Death-related costs, such as those associated with a burial or funeral, are not typically covered by standard life insurance policies, which is why a specialized type of insurance called “final expense insurance” exists. There is no financial value or investment aspect to this insurance, but the insurance is permanent as long as premiums are paid.
To safeguard loved ones from the financial burden of paying for funeral and burial expenses, many retirees without dependent children get last expense insurance. The premiums for such policies are often low, but the death payout is also rather little; it is not intended to provide your loved ones with a steady stream of income for a lengthy amount of time after your passing.
Whole-life, term life, and universal life policies are more beneficial for younger, fitter people who desire to accumulate financial value or provide a sizable death payout for their dependents.
If you or someone you know wants to learn more about life insurance, then Franklin Life and Annuity should be your go-to option. We offer some of the best life insurance Houston, Texas, and are known for our affordable and comprehensive coverages. We have a team of highly-skilled insurance agents that are experts in helping our clients get life insurance coverage according to their needs and requirements.
Whether you’re looking for the best life insurance quotes, final expense life insurance, or funeral insurance costs, we do it all. Contact us right now, and we’ll help you find an insurance plan that is suited to your needs.