When you purchase a vehicle you add auto insurance. When you purchase property then you add property insurance. If you are living well you should have Life Insurance.
Every family should have a long term financial plan and the most vital piece to that plan is Life Insurance. This form of insurance is one of the most over looked and least researched insurances that people obtain.
Finding the right program for you is where it can be confusing and frustrating to say the least but luckily it be discussed in better terms through some of the more common forms.
- Term Life Insurance
- Permanent Life Insurance
- Whole Life Insurance
- Universal Life Insurance
- Final Expense Insurance
Term Life Insurance
One of the most affordable and straight forward forms of life insurance available making it a common choice for many families. Term life insurance is a contract for a specific period of time between the insurance company and you. Standard terms are 10, 15, 20, or 30 years. The insurer accepts premium payments in exchange for paying the death benefit to the beneficiary of your choice if you happen to die during the term. Unlike some types of policies, when the contract ends, the term ends and with no cash value.
Permanent Life Insurance
We have gone through some of the more cut and dry options where as Permanent Life gets more complicated. This type of policy is not simply just an insurance vehicle but an investment vehicle as well. Yes it provides benefits of life insurance like paying out to a beneficiary upon your death but also starts taking portions of your payments to create a “Cash Value”. Similar to a savings account with abilities to borrow against. Permanent polices do not expire as Term policies do so as long as the monthly premium is paid and you are still living then the policy is active indefinitely.
Whole Life Insurance
The term whole life is just what is sounds like. Designed for your whole life. With a policy like this one you get a fixed premium amount for as long as you want the policy and each month you make your payment to the insurer. When the payment comes in it is then separated giving the policy some cash value which can grow over the life of the policy.
These policies tend to be much more expensive than Term Life Insurance however can have cash value where term has no value at the end of the period. Adding cash value has its benefits however its often times payment more for less.
Universal Life Insurance
Another form of Permanent life insurance that has the characteristic of savings but with premiums similar to what you may see in Term life insurance. Known as a flexible premium option however may require single lump sum premiums, or even a fixed scheduled premium. A cash value in this form of policy can be achieved and beneficiary’s only receive the actual death benefit.
Final Expense Insurance
This form of policy is a notable option. This is a peace of mind type policy sometimes known as burial insurance. Due to the rising costs of having a funeral which can average $15,000 for a loved one this insurance policy has grown a lot over the last few years. Like any policy the cost is based on factors having to do with the policy purchaser however is sometimes more obtainable and more affordable over other types of insurance programs. An example someone who may smoke and is in their 60’s could see $10,000 for a payment of under $50. Buyers of these types of policies generally are looking to leave their loved ones with some form of money to use for funerals or simply some emergency funds.
