Purchasing life insurance can be confusing and may not seem worth the hassle and price you pay. However, most people overestimate the price of life insurance by 2 to 3 times what it will actually cost you. But the question always remains, “What type of life insurance if right for me?” Below is a brief description on the 3 most commons types of life insurance that will hopefully give you an introduction into the life-long protection life insurance provides.
Life insurance is a contract between an insurance company and you where upon death they are obligated to provide a payment to your beneficiary in the form in a tax-free lump-sum for the amount detailed by the plan you purchase.
There are many different types of life insurance but there are three mains ones everyone should be familiar with:
- Term Life Insurance
- Universal Life Insurance
- Whole Life Insurance
Term Life Insurance
This plan is designed to provide financial protection over a set period. It tends to be less expensive and the premium payments stays the same over the course of the plan whether it’s 10 years, 20 years, etc. The benefit is in that the case of loss of income, financial burdens, etc., a term life plan can help save money while still providing protection.
Universal Life Insurance
A type of long-term, permanent life insurance, a universal life insurance plan is designed to provide last indefinitely and is open to a change in premium rates and coverage amount. However, due to its lifetime coverage it carries a higher premium price.
Whole Life Insurance
Another type of permanent life insurance, whole life insurance differs from universal because it provides a consistent premium to be met and is protection for the individual until time of death or the age of 100 when the lump-sum payment is paid directly as an endowment.
There are so many different types of life insurance that it is easy to get confused and become unsure of which type is right for you. If you ever have questions and need help making the right decision give us a call at 614-463-0455.