Life insurance is one of the most important investments that you’ll ever make for your family. It’s the best safety net that you can buy. In fact, it’s one of the only ways that you can take care of your loved ones if something tragic were to happen to you or allow your small business to continue to operate.
While everyone understands the importance of life insurance, only about half of those people buy policies for their families. There are several reasons why so many avoid buying this protection.
The two biggest reasons are that a lot of people don’t want to think about their deaths and that they don’t understand life insurance. Because it is such an important purchase, it’s vital that you understand which policy is going to meet your needs perfectly. Here are four types of life insurance for you to consider.
Term Life Insurance
Term life insurance is one of the most popular choices because it’s one of the most affordable. When you purchase a term insurance policy, it comes with a predetermined length of time, after which the insurance plan is no longer effective. Because term life insurance comes with an expiration date, it tends to be much less expensive than other options.
A term life insurance plan is perfect for a person wanting to meet a particular need. One of the main reasons to buy one of these plans is to cover a mortgage. If you were to pass away, your loved ones would be left with your massive mortgage debt and probably wouldn’t have the money to pay it off.
Having a life insurance policy will give your family members the money they need to protect themselves from being stuck with enormous bills. If you’re looking to take on a mortgage loan, it’s a wise decision to purchase a term life insurance plan that is the same length as the duration of the mortgage.
Whole Life Insurance
At the other end of the insurance spectrum is whole life insurance. Unlike term insurance, whole life insurance is a permanent form of protection. As long as you continue to pay the monthly premiums, you’ll have coverage, and you won’t have to worry about reapplying for the insurance in the future. This is a great option for people who don’t want to worry about eventually losing their life insurance.
In addition to never having to purchase another policy, you’ll also have the benefit of a cash-value component. The longer that you hold the policy and pay the premiums, the more value will accumulate inside the plan. In the future, the cash-value will be high enough that it will pay the premiums without you paying anything out-of-pocket.
One of the major disadvantages of these plans is their additional costs. Because they are permanent, you’re going to be paying more for a whole life insurance plan. As a result, these plans are not the most cost-effective options for anyone who is looking to save money.
Variable Life Insurance
Variable life insurance is another form of whole life insurance. However, it has a couple of distinct differences of which you should be aware. Variable life insurance plans have all of the benefits of whole life plans, such as permanent coverage and cash-value. But they also allow you to change how much you pay in monthly premiums and how much the death benefit from the policy is.
Variable life insurance allows you to invest inside of the policy and fluctuates depending on how well the market is doing. People often use these plans more like investment vehicles than actual life insurance because this kind of insurance is much more expensive than other options.
Although called “burial insurance,” this is nothing more than a tiny life insurance policy. Traditional life insurance companies sell these plans, but the burial insurance plans normally only go up to $25,000 in coverage.
Burial insurance plans are geared towards older applicants who no longer need a traditional life insurance plan, but don’t want to leave their family members with funeral expenses and other bills.
Eventually, you’ll reach the stage of life where you don’t have a massive mountain of debt and you no longer have anyone who relies on your paycheck. Then you might realize you don’t want to pay the expensive premiums that come with a life insurance policy.
Burial insurance is much cheaper than a large life insurance plan, but there are several other advantages to it. The first is that anyone can purchase one of these plans. That is, they can do so without the restrictions of the medical underwriting that come with a traditional insurance plan.
The condition of your health does not matter. You’ll be able to get a plan that will cover all of your final expenses. And you’ll be able to do so without handing over any unnecessary debt to your loved ones.
Additionally, there isn’t any medical exam required. As a result, you’ll be able to get burial insurance much faster than you would a whole life plan. In some cases, you can get insurance protection in as little as 24 hours. This timeframe is much better than the month the typical life insurance plan would take.
Life Insurance—What You Need to Know
Buying life insurance can be a long and confusing process because there are several kinds from which you can choose. But regardless of which type you choose, it’s vital that your family members have the insurance protection they need.
Not having life insurance could be one of the worst mistakes that you make that will impact your loved ones. If you were to pass away, they would be responsible for all of the debts you leave behind. Handling your debt can make an already difficult situation a thousand times worse.
While nobody wants to think about his or her own death, it’s vital that you prepare for the inevitable. Don’t wait any longer to get the life insurance your family deserves.
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