You might be deciding what type of life insurance policy works best for your personal situation and financial circumstances. Perhaps you’re wondering how much life insurance you need. Life insurance may be one of the most important investments you will make in your lifetime. You want to be wary before purchasing the first desirable policy.
You might be considering permanent life insurance as an option. Or maybe you’re looking at term life insurance, desiring the cheaper premiums. With both of these categories of policies, there are more specific types of insurance. Whole life insurance is one of these subtypes.
Whole life is the most basic form of permanent life insurance. Unlike term life insurance, permanent life insurance covers you until the day you die. With a whole life policy, you pay a fixed premium, so your policy rate will never increase. Whole life builds a cash value, which builds a reserved amount of money under your name for you to take from later, and guarantees a death benefit to your dependents.
The other forms of permanent life insurance include universal life insurance, variable life insurance, and universal variable life insurance. Universal life determines your cash value based on your interest rates and allows for a flexible premium cost, so you can pay more one period and less another period. Variable life offers a fixed premium and allows your investments to control your cash value and death benefit. Universal variable life is a combination of the two, with the investment model of variable life and the flexible premiums of universal life.
While some people invest in term or permanent life insurance alone, many benefit from purchasing both term and permanent life insurance. That way, they can pay the lower premiums associated with term life insurance for a fixed amount of time but receive coverage for life once they can afford to keep up with a permanent life insurance policy. Many people lose money by purchasing permanent life insurance alone. Due to the high premiums, many people fall behind on their payments, making their dependents unable to cash out on their policy after their death. If your financial standing may be in threat of lapses in payments, you should preserve your assets by starting off with a term life insurance policy.
If you’re looking to save money on life insurance, the most important thing to do is shop for quotes. Seeking out a policy with only one or two insurance companies is simply not enough, and you may end up paying more than you have to, which will make you more susceptible to lapses. Finally, make sure your dependents are aware that you have a life insurance policy. If you pass away without their knowledge of your existing policy, they may not seek a payout after your death. You don’t want your money to go to waste; be tactful with your life insurance policy.