|
The Different Types of Life Insurance
 Getting life insurance is essential if you want to
be sure your loved ones and financial interests are covered. Although
many young people do not need life insurance, the urgency of maintaining
your own policy inevitably rises as you age. It's not unusual for people
to amass considerable assets heading into their 50s and 60s, and that
means you simply need to account for such moneys in the event of your
untimely passing. The good news is that the insurance industry has
devised several ways to cover the bases with a reasonable policy, giving
you many options to choose from.
Term life insurance is one of the most common, and with good
reason. Unlike the broad suite of permanent life insurance types, term
insurance allows you to maintain far more flexibility in your finances.
If you have ever wondered what the difference is, the name says it all:
term life insurance is designed to last for only a set period of time.
There are a number of advantages associated with this approach,
principal among them that it tends to be cheaper than its longer-lasting
counterpart. You may also believe your worth or debts will change after
a given period of time – again, term life insurance allows you to cap
that financial relationship wherever you see fit.
Permanent life insurance comes in a variety of types, from whole
and universal to so-called survivorship insurance. The most pressing
question when determining which type to get may be how you want your
money to be invested and used over the length of that policy. Whole life
is generally considered the more conservative type, as it maintains a
fixed premium rate and involves considerable investments that may or may
not be returned to the policy holder in the form of a dividend. All the
expenses are fixed, of course, but you may say larger dividends than
expected depending on the markets.
Universal life insurance works somewhat differently. Instead of
flat premiums, you get to choose how much money you put into the
investment arm of that policy. Although the carrier still determines
when and how to invest the moneys, you can expect higher yield options
to pay more in a bull market. Many such policies also include a
provision that lets you apply your accumulated cash account against your
annual premiums – a boon if you want your money to start working for
you.
Each of the major permanent life insurance types allows for so-called
"variable" iterations as well. For the most part, these offer greater
flexibility in terms of the investment decisions that may grow or shrink
your account. Savvy investors and anyone who likes to play the market
may find more satisfaction and financial benefit in these fluid and
adaptive policies.
No matter what type of life insurance you choose, the important thing is
to provide for the people you will leave behind. Shop around for
different estimates and be sure and ask questions about any fine print
you may have missed. The devil is often in the details when it comes to
insurance. |
