One of the best features of life insurance is the fact that it has mainly two types – term life insurance and permanent (or cash value) life insurance. Your unique financial situation and customized needs greatly affect the type of policy you choose.
Types of Life Insurance:
Lets discuss in detail the two main types of life insurance:
Term life insurance is the simplest and least expensive policy option due to its pure death benefit. In the event of death, while covered by the “term” of the policy, the predetermined monetary benefit will be paid to the named beneficiary if you have paid the insurance premium. Most often, term life insurance is the best value for your money, as it retains the entire premium amount. The entire life insurance premium is used to pay the life insurance expense. In short, you pay the premiums for a term policy and there is no financial benefit other than the pure death benefit to those you leave behind. By the way, the death benefit paid to your beneficiaries is tax-free.
Term life insurance plans are effective for specific, designated periods of time (or “terms”), typically anywhere from 5 to 30 years. Because of this, term life insurance premiums tend to be far more affordable than that of permanent life insurance policies or other forms of permanent life insurance.
Term Life Premiums may be based on monthly, annual or quarterly renewable arrangements including:
- 5-year term level
- 10-year term level
- 15-year term level
- 20-year term level
- 25-year term level
- 30-year term level
For longer periods of time, the following term life plans are often the best option:
- 15-year term level premium
- 20-year term level premium
- 25-year term level premium
- 30-year term level premium
Renewable term life insurance offers a considerable amount of flexibility. Many consumers choose term life insurance because it is relatively affordable and provides an efficient and effective way to provide for their families in the unfortunate event of their death. Term life insurance, in this case, is not used as a long-term investment vehicle.
Consumers with long-term needs should be aware that if they keep a level term life insurance policy longer than the initial level premium guaranteed period, their premiums will increase substantially or may not be renewable.
Term Life Insurance Note: In some states, level premium term may be limited in the number of years of coverage, or it may not be available above a certain age. If the type of term life plan you request is not available in your state, LifeQuote will provide you with a comparable quote to meet your needs. To get an idea of how much term life insurance you need, use our life insurance calculator to estimate your specific needs and determine the coverage amount.
Permanent Life Insurance such as Whole Life, Universal Life, and Index Universal Life, differs from term life insurance in that it does not expire for a lifetime, as long as the policy owner continues to pay the insurance premiums. This type of policy also allows an accumulation of cash value at a minimum interest rate. These premiums typically remain the same or level, and the death benefit paid to the beneficiary is nontaxable. The key benefits of securing a permanent life insurance policy are that it ensures life insurance protection for the entire life of the insured, and it also provides a death benefit to the beneficiary regardless of the age of the policy.
Permanent life insurance will provide financial security for your family/dependent/another beneficiary during your lifetime and after your death. The amount you choose will be dependent upon several parameters, including your current financial situation, age, health status and other factors.
The premium rates of cash value insurance policies are generally higher compared to term life insurance. However, if you plan on keeping this insurance for a very long time, this may be the most cost-effective choice because term insurance on renewal goes up as you age. Another advantage of cash value life insurance is that it can eventually build up enough cash so you no longer have to pay premiums. Life insurance companies have many versions of these features. Remember, the cash is always there if you need it for things such as medical emergencies, retirement, children’s education, and other needs.
LifeQuote offers a quick and easy process that allows you to find the most affordable term life insurance policy on the market, from only top-rated insurance companies that you can trust. Many of the nation’s largest insurance carriers often offer the lowest rates because they have the resources necessary to compete for your dollars. At LifeQuote, we are more than insurance experts – we take the time to learn about you, your family and your preferences before recommending a life insurance policy.
We offer several features to help make the process of finding the right life insurance as simple and painless as possible.
To compare quotes, simply click get a quote and you will be taken to a page that asks you to complete a form. If you’re unsure of how much coverage you need, or how long the term should be, connect with one of our knowledgeable representatives immediately. You can send us an email or call our licensed agents at 1-800-521-7873.
Find out more about the differences between term insurance and permanent life insurance and the advantages below: