Think you don’t need life insurance? You may be wrong! Everyone needs life insurance. But, of course, there are a few exceptions to this rule. You may not need life insurance if:
– You’ve already raised your children and live on your own now
– You are young, single, and are only responsible for yourself
– You have the financial resources to financially support your family members
Nevertheless, life insurance is a must-have for most people. If you’ve never bought life insurance before, here’s our comprehensive guide to the different types of life insurance plans.
The Different Types of Life Insurance
Term Life Insurance
This kind of life insurance needs lower payments and is much less complicated. The payments guarantee a specific payout to your beneficiaries in the event of your death while the policy is still active. Essentially, it secures your family during the years in which a tragedy could be the most financially disruptive.
Convertible Term Life Insurance
This type of policy can be exchanged for a permanent life insurance policy of an equal value if the policyholder decides so. Typically, this exchange needs neither underwriting nor a medical exam, which makes it cost a little more than term insurance and is why it isn’t available once you reach a certain age. Usually, the policyholder is permitted to convert term policies before they turn 65.
Whole/Permanent Life Insurance
Whole or permanent life insurance provides life insurance coverage similar to that of a term policy, but the coverage doesn’t expire. Unless your permanent policy is cashed in, you’ll be paying the annual premium for the rest of your life. Unlike term policies that only guarantee a specific death benefit value, however, whole life policies have an important investment component and retain a cash value.
Basic policies provide a fixed death benefit and a cash value that slowly builds over time. The premium for this kind of policy is much higher than that for term life policies.
Universal Life Insurance
This type of life insurance is similar to whole life insurance but offers more flexibility. The key difference is that the death benefit payout and annual premiums will vary, in the case of a universal life insurance plan.
Variable Life Insurance
With this type of life insurance coverage, you have to choose your very own investment strategy in order to maximize the policy’s cash value.