Finding the right type of life insurance for your needs may not be as easy as it initially seems. A variety of plans exist. Most people, especially those who are younger, have ample options at affordable rates.
But, the terminology and the way life insurance policies work can be confusing. When it comes time to create the right type of financial plan for your family, life insurance should be a part of it.
At the same time, you need a policy that’s affordable and financially sound.
What Is Permanent Life Insurance?
Permanent life insurance is a policy that extends long-term. As compared to term insurance, permanent life insurance generally is not for a specific amount of time. Rather, permanent insurance is for a long period of time, as long as the policy remains paid for by the holder.
There are two specific types of permanent insurance to consider.
Whole Life Insurance: This permanent life policy does not expire as long as you pay the premium. It offers a fixed premium. That means that you will pay the same amount of money every year. It can accumulate cash value over time. This allows you to create an amount of money that you can borrow against down the road.
It is best for those people who want level premiums throughout the life of the policy. It is also beneficial for those who want cash value accumulation they can use while still alive. And, you cannot outlive your policy.
Universal Life Insurance: Universal life has flexible premiums. This means they will change year-to-year. You may be able to pay less each year by using some of the policy’s built up cash value. In some cases, you may accumulate enough funds to skip a premium.
You do not have to do this, though. The policy can accumulate value over time. The amount of growth that occurs depends on the policy’s underlying investments. If you want the ability to have adjustable premiums and cash value you can borrow against, this might be the policy for you. The long-term protection makes this a good option as well.
Because life insurance is complex, it is important to work with a well-qualified insurance agent who can help you select the right policy for your goals and financial needs. This will change from one person to the next. And, you may find your needs for life insurance changing over time as well.