Shopping for life insurance is no easy task. With all the different types, how do you find the best life insurance policy for you? When deciding which type to get, it is easy to narrow it down to what you need.
There are various types of insurance policies that companies offer today. It pays to understand how the insurance industry tailors each one and for who. To help you with this, here is a brief explanation of the types of life insurance policies out there.
Types of Life Insurance
There are many different and specific types of life insurance, but here we will stick to the basics. The common types of life insurance are:
- Term life insurance
- Whole life insurance
- Variable life insurance
- Simplified issue life insurance
Read on for a brief explanation of each type to find the best life insurance plan for you.
Term Life Insurance
This type of policy works for the average person. The usual length of term life insurance is 10-30 years and is the most affordable one on the list. Even aging adults can avail themselves of term life insurance!
Because this is a common choice, there are tons of term life insurance plans out there. Shopping for one can be tedious. Check out this Bestow life insurance review and make the application quick and simple.
Term life insurance would include a guaranteed death benefit. This is the amount your beneficiary will receive in the case of your death as the policyholder.
The downside of term life insurance is that you get no cash value savings option. You can only get cash value with a permanent life insurance policy such as the remaining two on the list.
Whole Life Insurance
Unlike term life insurance, this is a permanent type of insurance. It has two essential features: cash value and death benefit.
To simplify the concept of cash value, you can compare it to an investment savings account. You can use your cash value as a safety net as you can withdraw from your term.
While whole life insurance is the most common but expensive option out of the three. Your premiums remain constant; it’s permanent and builds cash value.
Universal Life Insurance
There are three types of universal life insurance. These are:
- Indexed universal life insurance (IUL)
- Guaranteed universal life insurance (GUL)
- Variable universal life insurance (VUL)
Universal life insurance is more flexible than whole life insurance. You can choose how much to pay in premiums according to your capacity and risk allowance.
Universal life insurance is more flexible but may take more time to understand. If you have enough time on your hands, it pays to tailor a policy that works for you.
Now You Know the Different Types of Insurance
The three common types of life insurance are term life insurance, whole life insurance, and universal life insurance. If you’re still unsure about your options, it’s best to consult a financial advisor. If you want to learn more about how the insurance industry works, check out our other blog posts.