How much do you know about life insurance?
Whether you already have life insurance or are thinking about getting it, understanding the different types can help you pick the right policy.
Here’s a brief explanation of five common kinds of life insurance and why someone might choose each one.
Term
Term policies pay death benefits if you pass away during a certain time frame — usually 10, 20 or 30 years. You might buy term life insurance if you want to protect your partner or children from the risk of losing your income during your working years.
Whole
Also called permanent life insurance, whole life covers you for your entire life. You might want a permanent policy if your heirs need to pay off your home, buy out your share of a business or pay estate taxes. Whole life also accumulates cash value that can fund a loan or additional insurance.
Burial (or Final Expense)
These are essentially small whole-life insurance policies. You might want a burial or final expense policy if you need $50,000 or less of permanent life insurance to help your family cover your funeral and burial, medical bills and consumer debts after you pass.
Universal
Like whole life, universal life is a permanent policy that accumulates cash value. It could be a good choice if you want flexible premium payments and death benefits; however, it doesn’t offer the guaranteed cash value accumulation that comes with whole life insurance.
Variable
Variable life insurance offers a permanent death benefit and cash value. In addition, it offers an investment account. You might choose this type of policy if you’re comfortable taking investment risks that could increase or decrease your policy’s value.
End-of-life planning is essential to help avoid financial hardship for your loved ones. Get in touch if you’d like to discuss what type of life insurance policy may be right for you.