Like health insurance, there are a bunch of options for life insurance. Some plans are suitable for others but may not be so much for you. All these forms of life insurance may seem confusing, but in truth it doesn’t have to be. There are some things to take into consideration, such as duration, premiums, costs and all other related facets of a life insurance plan, though these typically vary. Below is a list of common life insurance plans and how they work. Choose which one is best for you.
This is known as permanent coverage and offers protection for the entire life of the partied that’s insured. The way this one works is by carrying a “cash value” attribute that expands and grows differed tax over time. This usually has a low interest rate and ends when the contract is surrendered. Whole life payments mean that part of your premium goes toward the insurance, another part is applied to miscellaneous expenses and finally, administration. This plan is usually one of the more expensive options, but it does a good job of covering everything.
This plan usually has a flexible premium attached to it (see also: adjustable life insurance premium) and is a variation of the aforementioned whole life insurance. What sets this particular plan apart is the ability to adjust premiums and expenses throughout the contract, making it a very good option for those that can budget and stay on top of their insurance expenses. The cash values that come along with it are known to garner an interest as time passes, setting it apart from cheaper variants on the market. You won’t have to worry about it dropping below a certain level, either.
Variable life insurance combines the traditional assets of a normal whole life plan with growth potentials of investment funds over a period of time. Usually, it has two striking components: one of them is the general account and the other is a separate account. The general account mentioned above is a reserve or liability account program. It isn’t necessarily tied to the other accounts and more times than not, the life insurance provider won’t allow it to be related to the separate account. This is a great option for those who are financially savvy and get the most out of their investments.
Term life insurance is one of the most widely used and common policies around the world. It helps protect benefactors against loss related to your death and it also pays the face amount of the insurance policy. The downside is that it only protects for a limited amount of time. They don’t build cash values, either and the average maximum period is around 30 years.
These are the most common life insurance policies available to the market and are often the best coverage plans for the average person. Research each one to make the best choice for your insurance plans.