There are many people out there who have already gotten insurance, but there are many more who are questioning whether or not to switch to a different policy or they’re simply looking to get insurance for the first time. The only problem they tend to have is that they don’t know what the different types of insurance are or which one is the best for them. Here are the different types and why permanent life insurance is usually the most popular:
Term Life Insurance – This is your sort of basic coverage plan that is also the least costly. Virtually every insurance company offers this plan because its terms vary from five to twenty-five years, but the most popular plan by far is the annual plan.
The annual plan allows for a yearly renewal with little in the way of obligations to the company. This is also what makes it the cheapest, but it’s almost always for a set amount and usually only in case of untimely death.
Permanent Life Insurance –This is actually more of an umbrella term to cover what is an insurance policy that will cover a person from the time they get it to the time they die, and yes it doesn’t matter how long they live, they’ll still receive it!
This is the insurance that people usually swear by because it never expires. The only real drawback is that it can involve high premiums, depending on the coverage. It is the worry-free choice for most, though.
There are three types of Permanent Life Insurance:
Whole Life Insurance – This is one of the more common forms of permanent life insurance. It gives a bit more peace of mind in that the premium is locked in from the moment the coverage starts. People who get life insurance early benefit the most form Whole Life Insurance as the premium is likely to be lower when they get it at a young age.
The great thing about this plan is that the premium doesn’t change, so a person can count on the same payment every month. The only negative is that because the premium never changes, neither does the amount of coverage. This means that even with inflation a hundred-thousand-dollar policy will still be a hundred-thousand-dollar policy twenty or fifty years later.
Variable Life Insurance – This policy allows for a little more leeway on the investor’s part. There is always a guaranteed minimum amount that the policy will cover, but there are also funds that can be invested. This does involve the potential for a much higher reward.
The downside is the investments may not yield returns or they might even go bust. As a result, the amount that the death benefit will pay out can fluctuate a great deal.
Universal Life Insurance –This coverage allows for the person to decide how much they want to go into a cash value portion and how much goes into the death benefit. This allows a person to withdraw part of the amount accrued to pay off debts or buy a home, but once it’s gone, it’s gone!