TYPES OF LIFE INSURANCE
When you’re done reading, let our life insurance professionals walk you through your best fit.
There are numerous types of life insurance policies available for consumers. If there is a point in your search for life insurance where you become uncertain in your quest, it’s here. My advice is to not get lost in the types of insurance available as this is something that we’ll work on together to fit your need. I’ve listed term life insurance at the top purposefully as this is where your search for coverage will most likely begin. Term insurance is the absolute best way to get your life insurance started and your dependents protected today. Here’s the great thing, if you find that you would like a different type of coverage in the future, your term can be converted to other types of life insurance typically with a signature, no underwriting and without having to re-qualify for coverage at a later date. Our goal is for your family to be protected. The best place to start is with term life insurance.
The most popular type of life insurance is term insurance. The appeal to term life insurance is that you can purchase a great deal of coverage for much less money. Term insurance is very straightforward as you agree with an insurance company to pay your premium in return for an agreed upon death benefit. Most of the online ads that you see promising a gazillion dollars in coverage for as little as $12 per month are term insurance ads. Think of term insurance as renting your coverage for a period of time. The period of time is referred to as, the term. Common terms are 1 year, 10 years, 15, 20, 25 and 30-year terms. Your term insurance is the best place to start in getting your coverage in place. As you select your policy, you want to have a policy that is fully convertible. Conversion allows you to take a portion of
When Is Term Insurance A Better Fit For You?
- If you have a limited monthly budget, then this is the insurance for you.
- When you’ve started or added on to your family. Term insurance allows you to have an adequate amount of coverage to replace your income for those critical years in your child’s life.
- When you only need coverage for a specific period of time.
- If you’re an aggressive investor. (Buy term and invest the rest, philosophy of insurance)
Probably the permanent policy you’ve heard of or are most familiar with. Whole life insurance offers you life-long coverage with the option to accumulate cash value that can not go down. The cash value in whole life, life insurance grows at a very conservative and consistent rate of return. Too much money allocated to whole life insurance can be a bad thing but you can make a great case for getting a stable rate of return on your savings or rainy day fund. The death benefit for whole life insurance is generally much lower than term life insurance and is more expensive as some of your
When Is Whole Life Insurance A Good Fit For You?
- If you’re the kind of person who wants value in exchange for your premiums, whole life insurance is built to accumulate cash. The cash is an asset and can be used for the purpose of supplementing your income or personal loans.
- If you need life insurance for life, whole life can be a good way to have a paid up life insurance policy that continues to earn dividends each year you have the policy.
- If you’re a business owner. Many people are not aware that the cash in your life insurance policy is shielded in most states from lawsuits and garnishments. If you work in a field where you’re likely to be sued at some point, whole life insurance can be a great way to lock down your cash reserves.
Think of guaranteed universal life as permanent term insurance policy. This type of coverage doesn’t attempt to accumulate cash and rather than being built for 20 or 30 years like your term insurance it’s built to last to your 100th birthday or even as long as your 120th birthday. Because the policy doesn’t accrue cash value like whole life insurance, the premium is much lower.
If you like the cheaper premium of term insurance and are not concerned with using your life insurance for cash accumulation or as an asset but you want some form of permanent life insurance, guaranteed life insurance is for you.
When Is Guaranteed Universal Life Insurance A Good Fit For You?
- If you like the idea of having permanent insurance but you’re not concerned with accruing cash in your policy.
- Don’t like the expensive premium that comes with a whole life insurance policy.
No Exam Life Insurance
This is an increasingly popular type of insurance for people that typically don’t have the time to go through an exam or are afraid of needles. Generally speaking, this going to be a term insurance policy with a death benefit less than $2 million in coverage with no exam requirement and can typically be approved the same day or within a few days. The tradeoff though is that the premium will be more expensive—think in the neighborhood of 15-20% higher than a fully underwritten life insurance policy with an exam. Also, be careful with this type of coverage if you have a spotty health history as no-exam providers have a much more strenuous requirements in underwriting and are known to decline a higher percentage of applications.
There are a number of great companies that are specializing in no-exam or same-day coverage. Ethos Life is an excellent example of affordable, same-day coverage.
When Is No Exam Life Insurance A Good Fit For You?
- If you need a quick approval. (For example, for an SBA Loan)
- Generally in good health.
- If you value convenience over an extra 15-25% more premium.
Think of guaranteed acceptance life insurance as funeral insurance or burial insurance that our grandparents would have bought. Regardless of how unhealthy you are or whether or not you’ve been declined previously, you will qualify for this type of insurance. The premiums will always be more expensive as the policyholder will pay ~200% more than a healthy person would pay due to have to price in unhealthy people. The other drawback is that most guaranteed acceptance companies only offer benefits up to $25,000.
When Is Guaranteed Acceptance Life Insurance A Good Fit For You?
- When you can no longer qualify for traditional life insurance due health or other issues.