Ensures the policyholder’s beneficiaries can cover funeral costs.May be more affordable than other types of life insurance.Such policies are rarely in force long enough to build much cash value. While these policies may have a cash-value component, they’re typically not purchased as an investment tool. This makes these policies easier to buy than other life insurance types. They're also "guaranteed issue," meaning there’s no medical exam, and the policy is issued without extensive underwriting. These are typically whole life insurance policies with a limited death benefit (for example, no more than $25,000). Burial life insuranceīurial life insurance policies are marketed to seniors or those in poor health as a way to help family members pay for a funeral and associated costs. If you need permanent insurance that will never expire and have the resources to manage the policy's investment portfolio, variable life may be right for you. Typically higher cost compared to whole or universal life.May need assistance from a financial advisor to manage the policy investments.Higher potential investment returns compared to whole or universal life.You may decide to enlist the help of a financial advisor to manage your cash-value investment portfolio.Ī variable life insurance death benefit is usually fixed, as is the premium. These policies carry a greater degree of investment risk and reward than whole or universal life. These policies allow the most control over the cash-value investment: You can pick and choose from a portfolio of bonds or mutual funds in which to invest your cash-value funds. Variable life is permanent life insurance with cash value. That growth is not guaranteed, however.Ī universal life policy may be a good choice if you need permanent insurance that will never expire and have greater risk tolerance when it comes to cash value. Universal life also has a cash-value component that grows based on market performance. Importantly, you can adjust the death benefit and premium as your needs change. But unlike whole life, universal life offers a bit of flexibility. Universal life is another type of permanent, cash-value insurance. Whole life can be a good fit if you need permanent insurance that will never expire and are interested in cash value with guaranteed returns. Other forms of cash value insurance have more aggressive cash-value growth.You can access this money through a loan or withdrawal, though it may take several years to build up enough cash value to do so.īecause of these features, whole life policies tend to be significantly more expensive than term life policies. Whole life also has a cash-value feature, with earnings at a modest, though guaranteed, rate. Whole life is permanent insurance, meaning a policy stays in effect until your death, provided you pay the policy’s premium. Term life insurance is a good option if you need life insurance for a set term (for example, until children have reached adulthood) and aren’t interested in a cash value feature. Because of this, term life insurance is typically much simpler and cheaper than other types of coverage. Unlike many other types of life insurance, term life has no cash value component-it’s simply insurance. However, some insurance companies provide an option to renew coverage from year to year after the end of the term. You choose the length of the term when you buy the policy. Different types of life insuranceĪ term life insurance policy lasts for a set period-usually 10, 20, or 30 years. Let’s take a closer look at six key different types of life insurance. ![]() The good news is that having these options means you can get a policy closely aligned with your (and your family's) needs. Sorting through these and other options can take some time. Permanent life policies also typically have a savings feature known as “cash value.” A policy can either be in force for a set term or be permanent and remain in force until the end of your life. A key feature to understand is the policy’s length. In fact, there are a number of policy types to choose from, each with different features. Beneficiaries are often your surviving spouse or children, but they may include other family members, business partners, or a family trust.Ĭhoosing a death benefit is just one of the decisions you must make when buying life insurance. Choosing a higher death benefit means you’ll pay more. You typically choose the dollar amount of the death benefit when you buy the policy. All life insurance policies have one thing in common: They’re designed to pay a death benefit to your designated beneficiaries upon your passing.
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