Life insurance is often approached with apprehension and uncertainty. No one wants to think about the circumstances in which life insurance would be necessary. However, in order to protect, support, and provide for your family in the event that something does happen, life insurance is a crucial planning component.
Let’s say that you are interested and motivated in investing in life insurance. Knowing what you need can be another mystery to unravel. The names, language, and messaging of different offerings can often confuse buyers because they may seem to provide what you think you need but, ultimately, do not. That is why we are here to ensure that none of the industry specific lingo is misunderstood.
Three Basics of Life Insurance
As far as life insurance is concerned, the three primary offerings are:
- Term life insurance
- Universal life insurance
- Whole life insurance
They all sound nice and all-encompassing. Depending on your needs, goals, and intentions, there may only be one that effectively provides what you are looking for.
For those of us that need a life insurance policy for a specific set of time, term life insurance is the right way to go. These policies are set up to offer short term insurance, which typically means the policy lasts two to three years. These policies do not have any cash value most often, meaning they can not be borrowed against or surrendered for cash.
Term life insurance does offer an opportunity for families suffering after a loss. The pay off to the beneficiaries of the insurance policy can give them the financial support they may need to maintain a lifestyle, pay the mortgage each month, support your children through college, or even just pay for funeral costs. This kind of a policy is highly dependent on the amount purchased initially because the cash deposits toward the insurance are not extended throughout a lifetime. Due to its convenience and brief term length, term life insurance policies are a reliable source of insurance and one of the most sought after offerings in the industry.
There are two kinds of lifelong, or permanent, life insurance policies. The first is universal life insurance. This kind of insurance policy offers the insured the most flexibility in comparison to its other permanent insurance counterpart. With lower premiums and more policy options, universal life insurance can be very appealing.
This kind of policy offering is most often sold in the United States because of its inherent structure mentioned above. The leeway for opportunity and a potential for cash value and cash investment is something that has become a steadily increasing interest for Americans seeking life insurance. It may also be helpful to remember that these policies can be borrowed against for loans while the insured is still alive.
Whole life insurance is representative of the hypothetical because ultimately none of us intend to unexpectedly die, it can also be representative of stability and consistency. Whole life insurance is the policy of predictability. This option gives the insured peace of mind with death benefit guarantees, guaranteed rates of return and fixed premiums.
There really is not much guesswork with whole life insurance policies because they are firmly constructed. Similar to universal life policies, a portion of your premiums contribute to a cash value account that builds over time as well as the capacity to borrow against the insurance for loans. While this policy offering may not appeal to all because of its dependably firm components, this offering can also be a great option for individuals looking for a uniform but specialized option. This is probably why whole life insurance is the most common offering in the industry.
Life Insurance Made Easy
Preparing for the unexpected can be unnerving, uncomfortable, and unknown but getting educated to the best of your ability can also ease all of that tension. Life insurance agents spend their careers bringing service and contentment to families, couples, and individuals every day. Trusting their expertise in cooperation with an understanding of your needs will help negotiate and expedite this process.