Life insurance policies are an integral part of an individual’s life, or they should be. People who think otherwise are fooling themselves. It is one of the best and the most important investment decisions that you will ever make in your lifetime. A life insurance policy does not only step into the picture to rescue your family from financial turmoil after you pass away, but also helps you nurture visions for the long haul, plan for your retirement, and in some cases, protect your business.
There are more to these policies than meets the eye. Therefore, if securing the future of your loved ones, who are dependent on your income, was not reason enough to spur you into action, maybe the other reasons will.
We shall now shed light on the different types of life insurance plans available in the market. Some of the information in this article was sourced from the MarketReview.com guide on life insurance plans.
Term Life Insurance or Whole Life Insurance?
Deciding which type of insurance policy best suits your and your family’s needs is not always straightforward. The choice between selecting a term life and a whole life policy can be quite confusing.
Although their aims are similar, they do not satisfy identical needs. You must first assess the demands of your situation and only then go for the one that addresses them.
Whole life
A whole life insurance policy is usually the one credited with more perks than a term life policy. But that is not a universal rule. Typically, whole life works for the best when you purchase the plan at an early age. It has more to offer while you are still young than if you purchase it later in life.
Whole life insurance comes with a cash value besides just the death benefit, which is great if you want access to some money before you die..
Term life
Term life insurance, on the other hand, is more than the other types of policies on the block. However, in case of term life insurance, you are only eligible for death benefits.
It does not come with any cash value, unlike a whole life insurance policy. But, that does not mean that a term life policy does not benefit people. If you are concerned about what might happen to your family if you were to die, you should consider this type of policy.
Permanent Life Insurance
Permanent life insurance is a broad category and can be treated as an umbrella term under which several other types of policies fall. For instance, whole life policies come under this category.
This type of policy comes with a generous cash benefit. However, due to is ‘permanent’ feature, it has some disadvantages as well as advantages.
Universal Life Insurance
This type of policy includes death benefit plus a cash value at the end of its term, which you can use if you are still alive.
This might seem a bit like the permanent life policy, but there is a catch. The cash value that accrues allows you to skip on some of the premiums. This means that if you have enough money in your policy, you can use it to pay the premiums. Also, you as a policyholder, are entitled to change the terms and conditions of the death benefit and cash value without having to purchase a new one.
Variable Life Insurance Policy
The basic difference between whole life and variable life policies lies in the component of the cash value. In a whole life policy, its cash value growth may seem a little slow. Remember, though, that you are entitled to a guaranteed minimum growth rate.
In the case of a variable life insurance policy, on the other hand, the growth rate may look promising, but it fluctuates. The fluctuation reflects market conditions.
If cash value is a top priority, you should consider opting for a variable life policy. Whole life suits individuals seeking steadier growth.
Conclusion:
Hopefully, the information on this web page will make it easier for you to decide what type of policy you should have. Life insurance becomes increasingly more important the older we get – especially if we have dependants. With a good policy, you will have peace of mind, knowing that if you die before they do, they will have a safety net.