What are the Different Types of Life Insurance?

Written by Mike

Types of Life InsuranceWith so many types of life insurance to consider, making a final determination on what to purchase can take a lot of time and energy. When you buy the right policy, both you and your family will be better off for it in the end.

One of the most important steps to take is determining what type of life insurance is best for you at the present time. With multiple options, don’t make the mistake of believing that one policy is the same as the next. This is not true.

Below are five distinct life insurance products, along with a brief description of each one.

1. Term life insurance. This type of policy offers coverage for a predetermined period of time, typically ranging from 5 to 30 years. When shopping for a term life policy, there are three key details to consider: the length of the term, premium to be paid every month, and the death benefit.

2. Whole life insurance. With whole life insurance, the policy remains in effect until the policyholder passes on. This is the perfect choice for people who want to be guaranteed of leaving something behind to his or her beneficiary. Along with a guaranteed death benefit, other advantages include: predictable monthly premium, guaranteed cash value, and the ability to add riders.

3. Universal life insurance. Those who are interested in a term life policy while also earning money along the way should consider this type of insurance. With universal life insurance, a term policy is combined with a “money market like” investment that offers a rate of return. This may be a relatively new life insurance product, but the return is something that many consumers are attracted to.

4. Mortgage life insurance. As the name suggests, mortgage life insurance is often the right choice for those who currently have a loan on their home. This is a type of insurance that is designed specifically to repay a mortgage. If the policyholder passes on while there is a balance on his or her mortgage, the policy would pay out an amount equal to the outstanding debt.

5. Final expense insurance. This is a type of life insurance that is intended to pay for the cost of a person’s final arrangements, including but not necessarily limited to: funeral services, cemetery plot, casket, headstone, legal fees, and any debt payoff. Typically, final expense policies range from $5,000 to $50,000 and are much more affordable than a more traditional policy.

Final Word On Life Insurance

Now that you know more about the many different types of life insurance, you are in position to purchase the policy that is best for you and your family based on your current situation, age, and budget.

A young, healthy consumer may be interested in purchasing a term life insurance policy. On the other hand, those who have retired and are beginning to think about later in life may want to look into a final expense policy.

As long as you compare the different types of policies as well as multiple quotes for each one, making a final decision will be much easier. You will end up with a policy that you can trust to provide the proper level of benefits.

For More Check Out Our Life Insurance Buying Guide.