Different Types of Life Insurance

Life insurance is something that every adult should think about getting. A lot of adults don’t have it because quite honestly they don’t want to think about dying. Life insurance protects your family members. It pays out a sum of money to them after you pass away. In other cases, you might opt for a viatical settlement in the event of debilitating illness. The thought of ever needing this sort of protection is morbid to say the least, however, the regrets of having one always come to late. What’s the cost for peace of mind and security for those we love?

There are four different types of life insurance. The four types are term life, whole life, universal life and valuable life insurance. In today’s post, I will briefly go over all of them.

Term Life

The 1st type of insurance that I will be going over today is called term life insurance. Term life insurance provides life insurance coverage for a specified term. The time is usually between 10-30 years. Term life insurance doesn’t have any cash value to it. The premium is fixed for an initial period of time. The premiums per term are usually lower in the beginning than other types of life insurance. They increase as the policy owner gets older and once you get closer towards the end of the term.

Whole Life

Whole life insurance is the next one on the list. Whole life insurance coverage is lifetime. It is commonly called straight life insurance or ordinary life insurance. The premiums are fixed. They are based on the age of issue and typically do not increase with age. Whole life policies carry a cash value that grows at a guaranteed amount. The premiums are fixed. The benefits are guaranteed for the insurer’s lifetime.

Universal Life

Universal life insurance is a flexible policy. It is a variation of whole life insurance. There are several types of universal life insurance policies such as equity-indexed, variable universal life, and guaranteed death benefit. You can vary the amount of your premium with universal life insurance policies by using part of your accumulated earnings to cover part of the premium cost. Cash values earn an interest rate that is set by the insurance company.

Variable Life

The final type of life insurance that I will be discussing is called variable life insurance. Variable life insurance policies are the most expensive because they build up a cash reserve that you can invest in. It is designed to combine the traditional protection and saving features of whole life insurance with the growth potential of investment funds. With variable life insurance, the value of your cash reserves depends on how well these investments are doing.

To summarize, the four types of life insurance options that I went over today were term life insurance, whole life insurance, universal life insurance, and variable life insurance. Take the time to thoroughly read up about them. Sites like Investopedia go into further detail about them. Before you decide to get a life insurance make sure you weight the pros and cons for them. Remember, the cheapest option may not always be the best one for you.

Do you have life insurance? If so, what kind of life insurance do you have? Why did you go with that type?

Jason Butler

Jason Butler is an Atlanta native, as well as businessman, blogger and teacher. Not only is Jason a prolific flipper, marketer, writer and side hustler his number of years in higher education and student support have given him expert knowledge in understanding the economics of the student loan industry.