Best Type of Life Insurance for You Right Now

Life can bring on many unexpected events, and death is no exception. If you have a family and people who depend on you for financial support, you’ll naturally want to make sure they are well taken care of in case something happens to you. Life insurance is the security net to put your loved ones at ease and help maintain financial stability should you predecease them. A few types of life insurance are available, and it’s important to know which type of life insurance is best for your current needs.

 

The types of insurance for you now

There are three types of life insurance: whole life insurance, term life insurance, and universal life insurance. Each type has its own benefits depending on your unique life situation. Let’s look at how each type of life insurance works, what the benefits are and what the drawbacks may be.

 

Whole Life Insurance

Whole life insurance provides coverage for as long as you are alive, no matter what age. Whole life insurance best supports long-term goals and responsibilities, including providing the supporting income for a surviving spouse or providing for post-death expenses such as burial or funeral costs. Whole life insurance is most practical to buy when you are younger and just starting your family. Not only is whole life insurance more affordable this way, but also brings your family long-term security.

So, how does whole life insurance work? At the beginning of your whole life insurance policy, the insurance company will put some of your money into a high-interest bank account. Your cash value will then increase every time you make premium payments, which will increase your cash value on a tax-deferred basis.

One benefit to whole life insurance is that it allows for coverage along with savings. Over time, you can borrow cash against your life insurance policy, if needed. A downside, though, is that premium payments may be higher earlier on in the policy in comparison to term life insurance. With whole life insurance, you may also opt in to annually receive the dividends from the surplus of your insurance company. These dividends can be received in cash, left to accrue interest, used to reduce the premiums of your policy or used to buy more coverage. However, all of these benefits do come at a higher cost.

 

Term Life Insurance

What is the difference between term and whole life insurance? Simply, whole life insurance provides life insurance coverage for your entire life, while term life insurance does not.

So, then, what is a term life insurance policy? Term life insurance only lasts for a certain number of years, hence “term,” and it is often better to buy later in life or when you’ve built up enough financial security. Terms can range anywhere from one to 30 years.

There are even more benefits of term life insurance. As long as you continue to pay on your term life policy while it is active, there is a guaranteed death benefit, which is a lump sum of cash paid by your insurance company to your beneficiary. Term life insurance is beneficial for your short-term goals if you are in a financially secure situation, but it can also still be advantageous when you are young because of the very low costs and premiums.

Unfortunately, term life insurance can become expensive if the policy needs to be renewed as you age. There is also no way to cash in the policy early.

 

Universal Life Insurance

Finally, what is universal life insurance and how does it work? Universal life insurance is also called “adjustable life insurance” due to providing the option of flexible payments. Joint life insurance policies are frequently universal life insurance policies.

One great benefit is the ability to adjust universal life premium payments as your budget changes over time. You can also reduce or increase your death benefit and coverage options, as well as borrow against your policy, but this comes with many exceptions and should be done carefully.

The downside is the cost of universal life insurance. You may be able to adjust your premium payments, but your interest rates will be very high because of the flexibility. You must also pass a medical examination to qualify.

Choosing the type of life insurance best for your individual needs is less challenging when you meet with an experienced professional insurance agent.

Discover how much life insurance you really need, and contact Strassman Insurance Group today to discuss your options.

Strassman Insurance
nmurray@virtualstacks.com


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