Choosing a life insurance policy isn’t as simple as it seems because there are various policies available. Here’s a guide to the various life insurance options. Did you know that 37% of Americans don’t have life insurance? Many believe they can’t afford it. But if you know your options, you might think differently. You should also realize that having decent life insurance can actually make you healthier.
How Life Insurance Affects Your Health
Life insurance is purchased to protect your family if you pass away. It isn’t the same as health insurance, which covers your medical costs while you are alive. However, this doesn’t mean that life insurance can’t have surprising health benefits. Polls have shown that one of the biggest reasons people are stressed is that they worry about how their family will be provided for if they pass away. This stress causes a toll on their lives, which can cause other health problems. The good news is that having life insurance limits this stress and can help them be healthier. Dina Constantinou, an insurance industry veteran with 20 years of experience, discussed this on Quora. “Life insurance offers peace of mind. If one considers that equivalent to stress relief, then yes, it does. It provides individuals with the comfort of knowing that their loved ones will be taken care of in the event of their unexpected death. At the very least, it ensures the next of kin will not be stuck paying for funeral costs and final expenses out of their own pocket. I would imagine that does relieve some amount stress for most people.” Life insurance is one of the most affordable insurance products on the market. In fact, buying insurance of any kind can be a positive experience with the right preparation. If you know your options ahead of time and have a good plan in place, it’s actually easy. Easier than choosing the outfit you’ll wear to your sister’s wedding next month. Here’s our comprehensive guide to the life insurance options available on the market today.
Life Insurance Options
Let’s talk about the three most common types: Term, whole, and universal. These three make up the backbone of the life insurance options on the market. We’ll discuss the basics of each here. We spoke with some experts from LifeNet Insurance to learn more about the options. They gave a surprising amount of information that can offer you peace of mind when buying with them or any insurer.
If you’ve ever filled out a loan application, you know that they ask for the cash value of life insurance. Which is really confusing to anyone who doesn’t know the difference between term life and whole life insurance. Either way, life insurance is a must for everyone, as no one can predict the future, and we all must prepare for the unexpected. Term life insurance is the simplest product on the market. It carries $0 cash value. That’s right, if you’ve got term life insurance, feel free to write $0 in that spot the next time you fill out an application. Even though it carries no cash value, term life is a great option for most. Why? Because the premiums are lower. With a term life policy, all you need to do is pick how much coverage you want and how long you want it to last. For example, you can buy a $350,000 term life policy that lasts 30 years at $50 per year. That means you’ll pay $50 per year for as long as you want the policy up to 30 years. At the end of the term, you’ll need to reapply for another policy. No cash value, but easy terms and plenty of options.
If you’re looking for a permanent life insurance option, whole life is the way to go. With a whole life policy, your premium remains the same indefinitely. As long as you pay the bill, you get to keep the policy. You also need to be careful with the commissions of other plans, because they can be as high as 90%. Whole life also accrues a cash value. Meaning the longer you pay, the more money it’s worth. If you decide to cancel the policy, you can cash in the value at that time. The downside? It’s more expensive. Like with our previous example, you can buy a $350,000 policy. It will have no end date and it will accrue a cash value over time. But it will cost you $500 per year instead of $50. Whole life is a good option if you’re buying insurance early in life when you’re in good health and the premiums are lower. Or if you want something that’s going to last forever and don’t mind a higher premium.
Universal life is similar to whole life but more flexible. It also has no term, so it lasts forever. And it accrues a cash value. The difference between universal and whole life is that you get to choose how much of your monthly premium goes toward the death benefit and how much goes to cash value. In that way, you can ramp up the cash value if you need. For example, if you plan to take out a short-term loan using the life insurance as collateral.
Do Your Research and Plan Ahead
Basic life insurance options are not difficult to understand. All you need is to do a little research before you buy. Figure out how much you need and what type of policy you can afford right now. Fortunately, there are hundreds of policy options available on the market. Talk to your insurance agent and find one that’s right for you and your family. We can help you get your finances in order. Check out our finance page for more helpful information. Improve your peace of mind with a sound financial plan.