Life insurance has now become a basic necessity for people. Be it young adults or older ones, and life insurance provides your loved ones with financial safety and security when you are no longer there. The working of life insurance is straightforward. You pay monthly premiums; that amount is then given to the beneficiaries after the policyholder’s death. The amount shown as a death benefit is usually untaxed, and it is there to support the rest of the family in terms of finances. Life insurance has a few types. Given below is a brief introduction of some of the types so that you can get a basic idea about them;
Term Life Insurance
As the word itself shows, term life insurance is getting a policy for a limited number of years. The term can be of 10 to 30 years and is a straightforward and affordable policy type. Like any other insurance policy, you pay premiums monthly for life insurance, and if you die during the period, your beneficiaries get the death benefit. If your term expires, you get the chance of either renewing your policy or switching to a different type. It is often recommended to parents who want insurance till their children get independent financially. In general, it is a pretty affordable option.
Whole Life Insurance
A whole life insurance policy lasts for the entirety of your life. One keeps paying monthly premiums for it, and then their beneficiaries receive death benefits upon the policyholder’s death. An additional feature is that whole life insurance has the cash-value option that serves as a funding source for the policyholder.
Universal Life Insurance
Universal life insurance is like a combination of term and whole life insurance. Like whole life insurance, it lasts for the entirety of your life; however, it is a more affordable option as it is flexible in terms of premiums and hence the death amount and cash value. You can also pay or replace the payment of premiums if you have enough money in a cash-value account. The fact that you get the chance to change the death benefit makes it very popular among people. Overall it is, in general, often looked upon as a very complex policy to understand.
Variable Life Insurance
A variable life insurance policy is a permanent option and similar to universal life insurance. It, too, has a cash value account; however, it works a bit differently. For the amount in the cash-value account to be collected, you choose multiple investment options. Be it some bonds, choice of stock, or any other type. This way, the amount collected in the cash value account keeps fluctuating, and hence it depends on the performance of your investment choices. A plus point is that the cash value amount is not subjected to income tax and serves as a selling point for it.
Group Life Insurance
Group life insurance is widespread among people belonging to the working class. Employers usually give it to their employees. Group life insurance uses one contract to give the policy quote to multiple people at the same time. The employees can keep this insurance as long as they are part of that particular office’s workforce providing the policy. Because it is taken in bulk, group life insurance is relatively cheaper than other types. It is a good option if you plan to be associated with any firm for a reasonable period. It is straightforward and affordable.
There are various other types of life insurance, as well. These are some of the most common types, which have distinctive features. Each life insurance policy quote provides your loved ones with financial security and stability in a way or two. Therefore it is essential to get a good policy quote. So what are you waiting for? Get it now!