What type of life insurance gives you and your family the most peace of mind should the unthinkable happen? There are so many different life insurance products on the market that it can get overwhelming in the first stages of research. That’s why we’re here to offer guidance.
If you’ve ever turned on the TV during the middle of the day or in the evenings, you have a pretty good chance of being met with a commercial for some type of insurance. But they never get into the specific details of what you’re actually buying.
You could end up buying a product that is weaker and more expensive than other policies.
Quick Tip: Use the Instant Quotes form on this page to view rates from the nation’s leading life insurance companies.
To help you understand the various types of life insurance, we are going to provide a better description. This should enable you to make an informed decision before you make a commitment.
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Types of Life Insurance
There are two basic types of life insurance: Term Life and Permanent Life. Both of these require simple medical exams. There are a few others for
specialized cases like Final Expense and Guaranteed issue, but for the most part part you’ll want to know about Term and Permanent when you start looking for a policy.
Term Life Insurance
Term insurance is the cheapest form of life insurance you can buy. If you want something straightforward and have a limited budget for life insurance, this product is for you.
Term life insurance is simple. It only pays a death benefit. You purchase this type of insurance in periods of time such as 10, 20, or 30 years. If you want to renew the policy, you may do so, but keep in mind that your renewal rate (should you choose to renew) will be based on your age at the time of renewal.
Many policies allow you to convert your term policy to a permanent life insurance policy. You must convert within a specific period of time outline in the contract or lose this option.
There are three types of term life policies available:
Level Term Life Insurance
Premiums and death benefits remain the same for the duration of the term. This is the most popular type of term life insurance
Decreasing Term Insurance
Premiums remain the same but death benefits decrease over time.
Increasing Term Life Insurance
Both the premium and death benefits increase in increments over time.
Term policies may also be purchased with a variety of “Life Insurance Riders” which are simply an extra form of coverage for different situations that you can buy at an additional cost. The “riders” which you can select can include:
- Return of Premium
- Waiver of Premium
- Critical Illness
- Accelerated Death
- Child Protection
- Disability Income
- Accidental Death
These riders run a few extra dollars per month. Although that will vary with the amount of coverage you choose. Life insurance riders can provide more comprehensive life insurance coverage and better protection should something happen to you such as an accident at work or serious illness for example.
Talk to an independent agent today to learn more about the features these riders provide. Your rates only increase you age so the sooner you call, the more affordable it will be!
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Permanent Life Insurance
The other type of life insurance is called Permanent Life Insurance. Permanent life policies pay death benefits, but (unlike term insurance) cover you for your entire life. They also have a cash value accumulation feature.
There are a variety of hybrid forms of these policies, but the three main three sub-types of permanent life insurance are:
Whole Life Insurance
Whole life policies come as “participating” and “non- participating” policies. With whole life, the insurance company sets your premiums, death benefits and investment portion of the cash accumulation feature. It’s the most restrictive type of permanent life insurance.
Universal Life Insurance
Universal is very similar to whole life. The major difference is you can take advantage of some additional choices when it comes to how your premiums are paid, your death benefits and which investment vehicle you want to use for the cash value accumulation feature.
Indexed universal life offers you the most choices for your money. It’s offers you several options when it comes to the investment component of the cash savings component. Plus you receive better protection from market fluctuations because of its guaranteed rate of return.
With any type of permanent life insurance, There are differences, however, between what each insurance company may offer. So it’s wise to get quotes from a handful of different companies. An independent agent, like at Abrams Insurance, will shop the market for you and narrow down the best choices. Start with an Instant Quote on the left and we will start shopping the best rates for you!
Other Types of Life Insurance Policies
Don’t want to take a medical exam? No problem! The follow types of life insurance don’t normally require them. Plus you receive approval anywhere from the same day to within 48 hours of your application.
While convenient, these policies are more expensive because there is underwriting at the time of purchase. Also, the available coverage limits are significantly lower than what is available for term insurance. Basically, the insurance companies assume there are probably underlying medical conditions when someone doesn’t want to take the medical exam. They charge accordingly.
Final Expense Life Insurance
Final expense life insurance is designed to pay just enough to cover funeral and burial expenses. It can also help to pay some outstanding debts or leave a small legacy to your survivors. The premiums are very low compared to other types of life insurance, but so are the death benefits.
Guaranteed Issue Life Insurance
This type of policy works best for the elderly and for people with serious health issues. It’s a policy designed for anyone who might get denied for a standard life insurance policy. Many of these policies are graded. Which means there waiting period of anywhere from 1 – 3 years where you must survive before death benefits become payable to your beneficiary. Accidental death is covered from the start date of the policy.
This type of policy is often more of a guaranteed issue life insurance policy described above. It offers convenience and quick approval. Can’t stand the sight of a needle? This product gets you around the medical exam (needles and all). It’s also convenient if you need a policy fast for a business or bank loan. If you need $500,000 or less, the premium for a no exam policy can be just an inexpensive as a fully underwritten policy.
Things to Consider
Convenience and cost should not be the only reasons to consider when you buy a life insurance policy. Don’t buy a policy because it’s convenient and cheap. It could cost hundreds of dollars more than you should pay.
Also, to buy a policy simply because it’s cheaper may not be the right life insurance solution that you need. You should also consider your liability for estate taxes or to find other investment vehicles to supplement your 401(k). Life insurance is a long-term investment: it’s important to consider all the available options and products offered by each company.
These products can vary significantly in what they cover, who they cover and what they cost.
Speak to an Independent Agent Before You Buy
Speak with an independent insurance professional at Abrams Insurance Solutions. We research which companies are the most likely to offer you the best deal. We then perform the comparison shopping for you to find the best options for your unique situation. Once the research is complete (it doesn’t take long), we talk with you to come up with the right plan for your and your family.
We obtain quotes from only the most reputable companies. Call us with any questions you have about life insurance.
With access to over 70 life insurers, we know which companies have the most affordable policies, including policies for a multitude of medical conditions.
USE THE INSTANT QUOTES FORM ON THIS PAGE FOR A FREE AND CONFIDENTIAL QUOTE. If you need help or have questions, give us a call. We will help you navigate the many life insurance options and will save you time and money as well!