When you set out to invest in life insurance, you’re likely to get confused about which one to buy. These days, there’s no dearth of options to choose from. Be it term life insurance or simple life insurance, the variants linked to these two main types of insurance are many. They feature different attributes and benefits that have to be weighed properly to understand what’s best for you and your family.
In this article, we aim to throw light on the two broad categories of life insurance that can be purchased to provide you with more peace of mind. These insurance plans will provide different types of death and maturity benefits for taking care of the needs of your family members in the event of your unfortunate device. Read on to guide your purchase of the best life insurance plan and get the financial security you seek.
Main Categories of Life insurance
Permanent life insurance and term life insurance are the two general categories of life insurance available in the marketplace. According to experts associated with Simple Life Insure, it’s important to determine your exact coverage needs, the term of protection, benefits of life insurance needed, etc. to chalk your way forward.
Term Life insurance – an Overview
Term life insurance plans are the most basic of life insurance policies available in the marketplace. Very easy to understand, a term plan provides basic features, is low-key, and covers a defined set of years only. If you choose to purchase a term life insurance plan then the family members nominated in the policy will get the death benefit ‘only’ if you pass away while the policy is active. In other words, the benefits of the policy can be received only if your death occurs within the time period mentioned in the policy. If you have a small budget or are on the lookout for security alternatives for your family at a low cost, then you may want to consider a term life insurance policy. It is common for policyholders to invest in a term life policy after the occurrence of major life events, such as getting married, buying a house, taking a loan, having a child, and so forth.
Along with low-cost term plans, you may want to check out larger-sized policy coverage amounts to secure your needs. The size of term policies or death benefits usually begins at $50,000. The amount may reach up to multi-million dollars as per the terms and conditions laid down in the policy.
The word “term” in this type of life insurance relates to the number of years that the policy is active. Generally, the term period extends from 10 to 30 years and can be chosen as per your coverage needs. The other factors of consideration for selecting the best life insurance plan include the premium, balance term, coverage amount, mode of payment, and so forth. These attributes of a term plan have to be determined in the proper manner to gain the policy that’s right for you.
Term Life insurance – Guaranteed Level
This type of term plan is the most common of life insurance plans. It features a fixed yearly premium that extends across the entire lifetime of the plan, a fixed term, and pre-defined coverage. There is no assurance given by the Guaranteed Level Term Life Plan that you will gain automatic approval for policy renewal once the current term ends.
Term Life Insurance – Return of Premium
This type of term insurance policy returns the full premium paid once the term ends in case you remain alive across the term. On the other hand, if you are no more, then the death benefits will be paid by the insurance company to family members. As the risks are high for the insurance company in this type of plan, it serves to be costlier than the other kinds of term life insurance plans.
Permanent Life Insurance Policy
There is another type of life insurance plan that gives you a ‘forever-type’ guarantee if you agree to pay off all premiums in time and regularly. In other words, a Permanent Life Insurance Policy offers guaranteed benefits in the form of a portion of insurance premium being set aside for building cash value that’s similar to a savings or retirement plan. There are certain life insurance policies that provide a guarantee on the rate of ROI as well as the ability to borrow cash from the life insurance plan.
Whole Life Insurance
This permanent life insurance provides the guarantee of death benefits provided the premiums are paid regularly and timely. A whole life insurance policy keeps aside a small portion of the premium amount paid annually. The amount kept aside is invested by the investment company to create cash value; it is capable of being accessed in the future by the policyholder. There are certain options for borrowing against whole life insurance. However, the funds that are borrowed by you have to be paid back to avoid any deductions from the death benefit.
Universal Life Insurance
Universal life insurance plans are quite different from all other life insurance policies. It provides for flexibility in premium payments as well as the death benefit amount. Because of the high levels of flexibility provided by this policy, you may evade one or more payments targeted towards the premium as per your budget constraints. Instead, the cash value built for the cause can be directed towards the premium payments. However, in the case of universal life insurance plans, there are some minimum payments that have to be made over time to avoid the cancellation of your policy. Last but certainly not the least, a universal life insurance policy permits changes in the death benefit coverage in line with changes in the circumstances of your life.
Get in touch with a Life Insurance Company
It pays good returns to reach out to a qualified life insurance firm that can help you zero in on the best policy for your needs. Regardless of your budget, coverage goals, health conditions, and other factors of concern, experts in life insurance will help you get the perfect coverage in the shortest possible time.