One of the most frequent questions I hear in my insurance agency is an explanation of the various types of life insurance that are out there. September is National Life Insurance Awareness Month, so I wanted to put some info out there so you can be informed and make the right decision for your family.
While everyone can benefit from a life insurance policy, the real question is which type is the best way to protect you and your family. I wanted to give you the basics about the most common types of life insurance. School is back for the kids, and back for us! First class this semester... Life Insurance 101! :)
· Term Life - This is the most common type of life insurance. Term life premiums remain stable over a certain amount of time (the term) and if you pass away within that term the policy pays out the agreed upon value. Terms usually range from 10 to 30 years. During the initial term the premium stays level which means it does not change.
If you decide to renew the policy after the initial term the premium will rise to reflect the fact that you are now older and the risks of death are greater. Term life insurance is very easy and affordable; however it does not generate any cash value.
· Universal Life - This type of insurance offers a cash value and is a tax-deferred investment, which makes it more costly than term life. This type of insurance can be complicated with many variations, so make sure you have a clear understanding of how your policy works and ask for clarification on anything you do not understand. That's why we're here!
· Whole Life - This type of insurance offers a level premium and life insurance protection that lasts as long as you live. This type of policy can also accumulate a cash value that is tax deferred. Life Universal Life insurance, this is one of the more "complicated" types out there, so make sure to do your research and ask questions if you don't understand something.
These are the three main types of life insurance. There are variations of each, so make sure to do your research and ask all the questions you can think of when trying to make a decision about what fits best for you and your family. Feel free to forward this message to your friends and family who may also need a refresher on the basics, and feel free to give us a call today with any questions you might have. We're here to help!