First published: 8 July 2022 @ 6:00 pm
The most important thing to understand about life insurance is that there are many types. Each type of policy has different benefits and drawbacks, depending on your financial goals.
Therefore, the first step in buying a life insurance policy is to determine which kind of policy you want. The second step is to find out what the coverage amounts are for each kind of policy, and the third step is to make sure that you can afford the premiums.
Nine Different Life Insurance
When you buy a life insurance policy, you need to decide which kind of policy you want to buy and why. You also need to decide what amount will be enough coverage for your needs.
Here are nine different life insurance policies that we recommend people consider.
1. Burial Insurance
You may also hear it called funeral or final expense insurance. It’s a small policy that you can buy for your entire life that will pay only for your funeral expenses and other final expenses.
Life insurance companies often offer it to those who are hard-pressed to get a quote for it, and that doesn’t require a medical exam.
RELATED: Introduction to Insurance: The Different Types and What They Are For
2. Credit Life Insurance
Credit life insurance is a type of policy that a borrower may purchase in order to pay off the borrower’s outstanding loans if the borrower dies.
The face value of a credit life insurance policy decreases with the amount of the outstanding loan until the policy is worth nothing. There are several reasons it is worth less than a standard life insurance policy.
A policy’s cash value component decreases proportionally to the outstanding debt; as a result, the policy’s value eventually decreases to zero.
3. Mortgage Life Insurance
You can buy mortgage life insurance to cover the outstanding balance of your mortgage should you die while the mortgage is still in place. You can take out this insurance on your own, or take it out jointly with a partner.
There are two kinds of insurance you can choose from: decreasing-term insurance and level-term insurance.
4. Supplemental Insurance
If your health suddenly deteriorates or a serious accident happens to you, having insurance that helps you cover medical expenses can help you.
For a monthly premium that’s less expensive than taking your family to the movies, these policies help provide peace of mind when the unexpected illness happens in the future.
5. Survivorship Life Insurance
Survivorship life insurance is a type of joint insurance policy which pays out benefits to both policyholders when they die. It doesn’t pay out benefits until both policyholders are dead.
6. Term Life Insurance
Term life insurance policy can be a great way for you to provide for your family when you die. Your family members will get the benefits they deserve.
Your premium payments stay the same for the entire term of coverage. When your premium level expires, you can continue paying premiums during that time (typically by increasing the amount you pay annually up to a certain age) or you can stop paying and stop getting term life policies coverage.
If you die while you have coverage, your beneficiaries receive the death benefit.
7. Universal Life Insurance
Universal life insurance is like having a permanent insurance policy that protects your assets for the rest of your life. A universal life insurance policy protects the insured person for the rest of their life, as long as they pay the premiums and fulfill any other requirements of the policy to stay protected.
Like many permanent life insurance policies, universal life insurance also allows you to save money and receive cash benefits upon your death. When you die, your beneficiaries will receive the death benefit from the money that your life insurance policy paid you.
8. Variable Life Insurance
Life insurance policies that pay life benefits are contracts you enter with an insurance company. It should meet your financial protection needs, your investment goals, and your tax planning objectives.
Variable life insurance is a policy that will pay a specified amount to your beneficiaries (or those whose relatives you left) upon your death. It has a cash value that varies depending on the amount of premiums you pay and on the amount of the fees and expenses you pay.
It may also differ depending on certain investment options, usually mutual funds, offered under your policy.
9. Whole Life Insurance
Life insurance is a type of life insurance that is permanent, and so as long as we pay premiums on time, it protects us for the rest of our life.
Whole life insurance policies are the most common type of insurance people buy. They cover everyone for the rest of their life. In most cases, the premium and death benefit remain the same throughout the term of a life insurance policy.
Don’t Make The Wrong Choice
The types of life insurance policy that you buy depend on your individual needs and risks. Make sure that you do not miss any important information, such as rates and period of time, when buying life insurance.
Our website, HandyWork, is an excellent place to start your search for life insurance quotes. You can also learn more about how to buy life insurance and how to choose the right kind of policy by reading our articles.