The Different Kinds of Life Insurance
It’s an unavoidable truth—death is as predictable for us all in the end as just about anything you can compare it to. The sun will rise in the morning, the earth will keep on turning, and we’re all going to die one day. Morbid, perhaps, but still true. And inasmuch as we’d all love to stay young and beautiful, once we realize that mortality is inescapable, we’re going to want to choose a life insurance policy.
Three out of five people own some type of life insurance, and another 34% report a likelihood of making a purchase within the coming year. [1] If you don’t yet have a policy in place, consider this: 100% of Americans have a 100% chance of death at some point in their lives.
Life insurance is one kind of insurance policy that stands apart from others, in that the policyholder has a certain need for the benefits at some point in time. Medical insurance or auto insurance isn’t quite the same since there is a chance you won’t get sick, or that you won’t have a car accident, meaning you won’t have a need for the insurance benefits.
But when it comes to life insurance, your needs will depend on a number of factors, including the size of your family, the nature of your financial obligations, career stage, and your goals. For example, when you're young, you may not have a great need for life insurance. However, as you take on more responsibilities and your family grows, the need for life insurance increases exponentially.
The two basic types of life insurance are term life and permanent (cash value) life. Term policies provide life insurance protection for a specific period of time. If you die during the coverage period, your beneficiary receives the policy's death benefit.
If you live to the end of the term, the policy simply terminates, unless it automatically renews for a new period. Term policies are typically available for periods of 1 to 30 years and may, in some cases, be renewed until you reach age 95. With guaranteed level term insurance, a popular type, both the premium and the amount of coverage remain level for a specific period of time.
Permanent insurance policies offer protection for your entire life, regardless of your health, provided you pay the premium to keep the policy in force.
Many different types of cash value life insurance are available, and with so many types of life insurance available, you're sure to find a policy that meets your needs and your budget. Consult with a professional to get all the pertinent information to make an informed choice.
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