Jeffrey Wade
Life insurance is a policy that provides a death benefit payout to beneficiaries if the policyholder passes away while it’s active. There are various types of life insurance, including whole life insurance, universal life insurance, and term life insurance. Each type of insurance has its own pros and cons, so it's important to understand the different options available to find the best one for you and your family.
| Characteristics | Values |
|---|---|
| Type | Term, whole, universal, variable universal, final expense |
| Cost | Whole insurance is initially much more expensive than term insurance |
| Coverage | Term insurance is typically sold in lengths of one, five, 10, 15, 20, 25 or 30 years |
| Control | Variable universal insurance allows the policyholder to decide where to allocate funds |
| Risk | Variable universal insurance requires investment know-how and an understanding of risk and reward |
| Payout | Life insurance provides a death benefit payout to beneficiaries |
| Additional benefits | Some plans offer benefits that can be used while the policyholder is still alive, e.g. to cover medical expenses |
What You'll Learn
Term life insurance
Life insurance is a policy that provides a death benefit payout to beneficiaries if you pass away while it’s active. There are various types of life insurance, but term life insurance is a simple, low-cost policy that replaces your income when you die. It is typically sold in lengths of one, five, 10, 15, 20, 25 or 30 years. Most people buy term life insurance for a length long enough to cover their prime working years. That way, if they die early, they can help a surviving spouse or other beneficiary meet short-term financial needs like paying off a mortgage or supporting their kids through college.
When choosing a term life insurance policy, it is important to consider the coverage amount and length of the policy. The coverage amount can vary depending on the policy but can go into the millions. You should also think about any additional benefits you may want, such as access to money during your life or the ability to cover medical expenses.
Some experts recommend term life insurance as the best type of life insurance. For example, Dave Ramsey, a personal finance expert, fiercely defends the idea that life insurance protection should never be permanent. He believes that term insurance is the best option, period. However, it is important to do your research and understand the different types of life insurance policies before making a decision.
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Whole life insurance
Life insurance is a policy that provides a death benefit payout to beneficiaries if the policyholder passes away while it’s active. There are various life insurance options, but whole life insurance is a good option for those who want a predictable and low-maintenance policy that will cover them for the rest of their life.
Term life insurance is a simple, low-cost policy that is typically sold in lengths of one, five, 10, 15, 20, 25 or 30 years. It is designed to replace the policyholder's income when they die, helping a surviving spouse or other beneficiary meet short-term financial needs.
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Universal life insurance
Life insurance is a policy that provides a death benefit payout to beneficiaries if you pass away while it’s active. There are various types of life insurance, but they tend to function similarly. You must pay regular premiums to receive your benefits. Some life insurance plans offer benefits that can be used while the policyholder is still alive, for example, to cover medical expenses or everyday living costs.
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Variable universal life insurance
Life insurance is a policy that provides a death benefit payout to beneficiaries if you pass away while it’s active. There are various life insurance options, but they tend to function similarly. You must pay regular premiums in order to receive your benefits. Depending on the type of life insurance policy, there may be other benefits available. Some life insurance plans offer benefits that can be used while the policyholder is still alive. These benefits may come in the form of a cash value component that can be used to help cover medical expenses or everyday costs of living.
Universal life insurance is another type of permanent policy that’s designed to cover you for the rest of your life, as long as you pay the premiums and don’t deplete your cash value. If you’re looking for a predictable and low-maintenance life insurance policy that’ll cover you for the rest of your life, whole insurance can be a good fit. It helps you leave behind a sizable amount of tax-free money to your loved ones and gives you access to money during your life. On the downside, it does initially come at a much higher cost than term life insurance. However, the premiums will not increase as you get older as they do with other types of insurance, including term insurance renewal.
Term life insurance is a simple, low-cost policy, and its main purpose is to replace your income when you die. It is typically sold in lengths of one, five, 10, 15, 20, 25 or 30 years. Coverage amounts vary depending on the policy but can go into the millions. Most people buy term life insurance for a length long enough to cover their prime working years. That way, if they die early, they can help a surviving spouse or other beneficiary meet short-term financial needs like paying off a mortgage or supporting their kids through college.
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Final expense insurance
Life insurance is a policy that provides a death benefit payout to beneficiaries if you pass away while it’s active. Final expense insurance, also known as burial insurance, is a type of life insurance designed to cover end-of-life expenses such as a person’s funeral.
The cost of final expense insurance can vary depending on the coverage amount and the age of the policyholder. It is important to shop around and compare different policies to find the best option for your needs and budget. Final expense insurance can provide peace of mind and help ensure your final wishes are carried out.
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Frequently asked questions
There are several types of life insurance, including whole life insurance, universal life insurance, term life insurance, and variable universal life insurance.
Whole life insurance is a permanent, predictable, and low-maintenance life insurance policy that covers you for the rest of your life. It helps you leave behind a sizable amount of tax-free money to your loved ones and gives you access to money during your life. However, it comes at a much higher cost than term life insurance.
Term life insurance is a simple, low-cost policy that replaces your income when you die. It is typically sold in lengths of one, five, ten, fifteen, twenty, twenty-five, or thirty years. Most people buy term life insurance for a length long enough to cover their prime working years.
Variable universal life insurance is best for investment-savvy people who want more control over their cash value's growth. You decide where to allocate the funds, so it's important to understand the risks and rewards involved. It can be a good fit for people who have already maxed out their retirement contributions and want to build additional savings.
