Choosing the Right Life Insurance

The Life Cycle of Life Insurance

To many, life insurance is a contingency plan, something you enroll in to help you have peace of mind that your loved ones will be covered in case you pass away. To others, life insurance is an investment tool, a gift, or even simply a method to lessen the burden of final expenses (such as estate taxes or funeral expenses).

As you age, your life insurance needs might change, and with that, so might the kinds of life insurance you are interested in.

Why get Life Insurance?

Whether you’re starting a family or just starting to worry about the future, life insurance is first and foremost assurance. Assurance that no matter what happens to you, the people you care about are going to be financially supported if you pass away.

Life insurance can help your loved ones with the burden of funeral expenses or your financial debt. Life insurance can even be used as collateral on some loans, it can build cash value (that you can access before death), and certain types even act as a medium for investment.

With dozens of customizable and convertible plans, life insurance can be tailored specifically to benefit you in a way that’s affordable. The question is, which plan is best for you?

Types of Life Insurance

Whole, universal, and term life insurance are the most common types of life insurance out there. At their core, they function similarly and pay out a certain value should you pass away—the big difference is really just how you plan to finance them and how they change over time.

Whole Life Insurance

Whole life insurance is the most straightforward type of life insurance. With whole life insurance you’re assigned a set premium when you sign up, with few exceptions, that’s the premium you’ll pay for the rest of your life.

While the figures used to generate this chart are not accurate, they give a sense of the basic financial implications that come with a whole life insurance plan. The cost of your premium varies based on your age, your lifestyle, and (in some cases) your general health.

Whole life insurance usually has the highest premiums out of all other life insurance plans. There is some customization in the form of riders that you can apply to whole life, and in some cases your policy can build cash value or even be returned to you or converted, but these specifics vary from plan to plan.

Universal Life Insurance

Whereas a whole life insurance policy takes a snapshot of your health to form a premium, a universal life insurance policy adjusts your premium to match the cost of life insurance to you, but! With universal life insurance, portions of your fund that go “over” the premium are invested into an index. Any positive gains on that investment go back to paying your premium.

While it might sound like you have to do mental gymnastics to understand what a universal life insurance policy is, just know that it’s a plan that uses investments to help you build cash value within your plan, ultimately saving you money.

What is Term Life Insurance?

Term life insurance refers to a specific type of life insurance that has a guaranteed rate for…  well, a term! Your term life insurance rate generally lasts between 10 and 30 years. Once that term has ended, your rate will change.

Term life insurance is often the most customizable, riders can be added that allow you to convert your term into a whole/universal plan, to have a percentage of your premiums returned to you (should the plan not payout), and many more depending on the carrier. Terms also vary the most in price, as certain riders/plans can drastically change how much life insurance costs. In most cases, a plain term life insurance plan will cost you less than other plans, but again, this is dependent on your age and general health.

Which Plan is Best for Me?

Obviously, there are a lot of factors that go into life insurance and there is no “best” choice that works for everyone. Instead, you need to consider what your goals are and how you plan to finance them.

For example, if you want life insurance to replace your income and help your loved ones after you die, consider enrolling in term insurance to make the most out of what you put into it. If you’re looking more for an investment, then universal life insurance might be right for you.

But before that, you need to know what plans you’re being offered. You can find those by clicking the button below and getting in contact with one of our life insurance specialists. After a few questions, they’ll be able to walk you through your available options and help find the one that best suits you.

Get a Customized Life Insurance Quote