If you’re looking to buy life insurance in the near future you will want to consider all of your options. Knowing things like how life insurance works and how certain types can benefit your situation better than others is very important. In this article I’m going to cover two types, term and permanent policies.
First off, you have term life insurance. It’s called term life because this particular type of life insurance only last for a specific period of time. A typical term life insurance policy will usually only last around 10 to 30 years and then you will have to reapply for coverage again which will more than likely drive your premiums up as result of age and health conditions.
Their are several types of term life insurance such as guaranteed level premium which guarantees your premiums won’t change and stays the same throughout the entire term of the policy. You also have convertible term life insurance. This type lets you convert your term policy into a permanent policy. The benefit to this is you won’t have to reapply for coverage down the road although premiums may go up if you convert.
Secondly you have permanent life insurance policies. This would include whole life, universal life, equity indexed universal life, and even variable universal life insurance just to name a few. The big benefit to these types of policies is that they all contain cash value accounts.
With cash value accounts a portion of the money you pay into the account is saved and over time helps cut the cost of insurance down. For example if you have a $100,000 worth of coverage and you have $80,000 in the cash value you are in a sense only paying for $20,000 worth of life insurance.
In the end a term policy makes a great fit for those who want to save a few buck and also works good for older people who suffer from health issues and higher age. While a peramanent policy is a good fit for younger people who have the time to save up the money and cut down the cost of life insurance over time.