You’ll need to answer two key questions before you even begin your search for life insurance: what kind of coverage do I need, and how much should I get? As you compare prices and policies, you’ll eventually end up with a policy and level of protection that works for your budget.
To help you get started, here is a quick rundown of the various forms of life insurance:
Term life insurance
A term life insurance policy covers the insured for a predetermined period (5 to 30 years). You can name a beneficiary to receive a lump sum payment if you pass away before the term finishes. Many people find that term life insurance policies are the easiest to understand and obtain.
In the event of your untimely demise, the coverage will be paid out to your heirs in the form of monthly payments, an annuity, or a lump sum payment. Most recipients prefer a single cash payment. Compared to permanent life insurance, the cost of term life insurance is typically lower.
Permanent life insurance
Permanent life insurance policies cover you for your entire lifetime:
Whole life insurance
A whole life insurance policy should remain in effect until your death as long as you continue to pay your premiums. It’s the most convenient form of life insurance there is. Your premiums won’t go up or down, your cash value will grow at a set rate, and the death benefit won’t decrease if you don’t adjust it.
Whole life insurance is useful for people who have long-term dependents like loved ones with disabilities or if they require cash value for investment or estate planning.
Universal life insurance
This is also called adjustable life insurance since it offers a feature that sets it apart from other types of permanent life insurance: flexible premiums. Universal life insurance is a good option for people looking to have their cash value grow based on the stock market.
Variable life insurance
Variable life insurance is the high-stakes among the several kinds of permanent life insurance. Variable life insurance policies derive their cash value from various investment options like securities and mutual funds. The face value death benefit is guaranteed, and the premiums are fixed irrespective of market performance. This insurance is suitable for people who enjoy taking calculated risks since gains or losses will vary depending on how your sub-accounts perform.
Simplified issue life insurance
No medical exam is necessary when applying for simplified-issue life insurance. You’ll have to fill out a health questionnaire on smoking and major illnesses instead and then talk to an underwriter over the phone. Simplified issue life insurance policies are mainly for older people between the ages of 60 and 85.
Guaranteed issue life insurance
You don’t have to worry about a medical exam or answer any health-related questions when you apply for guaranteed issue life insurance, as long as you keep up with payments. The insurance firm has to assume a greater risk by providing these plans, so these policies offer less comprehensive coverage and higher premiums.
Group life insurance
This refers to the kind of life insurance purchased by many people at once, such as employees of a single company or members of a trade association. While term life insurance is the standard for group policies, some companies may offer permanent coverage as a paid perk. Group life insurance might not give you the most protection, but it’s a great option to get started with or add to your life insurance portfolio since it’s both simple and inexpensive.
Final expense/Burial insurance
Final expense insurance, often known as funeral insurance, is a subset of whole life insurance with a death benefit that covers final expenses such as a burial or cremation and any unpaid medical or debt payments. Final expense policies are more accessible to those who are older or in poorer health.
Final expense insurance policies in Houston often have low premiums, but the death benefit is also small because it isn’t intended to support your loved ones for a long period after your death. Whole life insurance, universal life insurance, and term life insurance are all good options for younger, healthier people who want to save money or provide a substantial death benefit for their loved ones.
Get in touch with us at Franklin Life & Annuity if you’re interested in purchasing life insurance or final expense insurance in Houston, TX. Our independent life insurance agency experts will help you find the best policy after assessing your financial and individual needs. With us, you can have peace of mind knowing that someone is looking out for your loved ones after your passing.