Life insurance cushions the overwhelming feeling of the passing of a loved one and the burden of going through financial strain at the same time. Now, everyone that considers his family’s well-being and prioritizes their happiness even when he’s gone always considers life insurance coverage. It helps to reduce the stress on the family and is a way of looking out for them financially when the chips are down.
What is a Life Insurance
Life insurance is a type of contract that binds you as a policyholder and an insurance company. Ultimately, the contract says that the company must provide financial coverage to the beneficiaries of the policyholder in the event of the passing of the policyholder. More so, that financial coverage means paying a certain amount of money to the beneficiaries in exchange for all the premiums the policyholder paid while alive. Moreover, the policyholder is mandated to name the beneficiaries in the contract while alive.
Additionally, there are different types of Life insurance policies that you can pick from. Also, search out quotes from different companies. This will help you make an informed decision before you start your payment.
Types of Life Insurance
Moving forward, life insurance benefits you and your loved ones in so many ways. On the same hand, there are different types of life insurance to choose from but it depends on your needs and what you can afford. So, here are some types you can choose from
Term Life Insurance
Firstly, this type of coverage is the most affordable of the rest and also the most popular. Again, term insurance has a very limited amount of years the policy can last.
Typically, this plan has a duration of not more than 30 years. Your beneficiaries get to keep getting the exact sum of money until it exhausts the length of the stipulated year. After it expires, your beneficiaries can renew or let it go.
Furthermore, before you purchase a Term policy, you need to consider these options
- Renewable Term
This is the cheapest term policy. Also, as it is called, it is renewable each year. It comes with a quote for the year you bought your plan. This plan increases, annually.
- Decreasing Term
More so, this plan is renewable yearly too. But the difference is that the coverage keeps decreasing as the year goes by. Remember, the term life insurance starts from any year but does not exceed 30 years
- Convertible Term
This type of term policy allows the holder to convert their coverage from term to permanent life insurance. That is, you can go from having a short-length life coverage to owning a permanent life coverage.
Whole Life Insurance
Basically, whole life plan lasts as long as the lifetime of the policyholder. So, in the event of the passing of the policyholder or insured, the beneficiaries get permanent coverage from the life insurance of the insured. Besides, this coverage carries a means of savings too that is called cash value. One of the ways to build up your cash value is to put back your dividends into the insurance payment.
Universal Life Insurance
Universal coverage is another kind of permanent coverage. The insured or policyholder keeps paying for the premium all their lives. But the beneficiaries get the benefits in the event of the passing of the insured. This coverage has a low premium just like term coverage. And it can accumulate as a cash value. Although whole life insurance is also a permanent coverage, Universal has a better option because it has more flexible features. Again, there are types of this coverage you should know.
- Indexed Universal
This type allows you to earn a fixed amount of return on your cash value accumulation.
- Variable Universal
Variable gives you the option of flexible premiums and lets you invest your cash value separately in another account.
This insurance covers only the burial expenses of the insured, and it starts from at least $5,000.
In continuation, this coverage protects the second person in the insurance plan, not a beneficiary though. This plan favors married couples and it carries a larger financial plan. This plan can pay for federal taxes or pay for a trust fund.
Best life insurance plan for you
So, while you make plans for the future and decide to include a life insurance plan, you might get confused. If it comes to this, there are things you should check out before you arrive at a decision.
First, how much money are you willing to keep spending on this coverage? This should be your first start.
Secondly, how long do you want your coverage to last? As seen, there are different types of coverage and it is only you that can decide how long you want it to last. You can decide between term and permanent plans.
Again, a large extent of the determining factor is the company you want to buy your coverage from. Literally, wisdom demands you go over different company policies and what they require and give. That way, you can choose a better company for yourself.
- It has a low premium cost
- Can be convertible
- Has a means of savings called cash value
- Protects your loved ones in your passing
- Can be used to pay for federal estate taxes and trusts
Life Insurance companies
Already, you know what life insurance is and the types and benefits. Now is the time to list out a few good companies in case you are looking.