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Sebastopol, CA – Types of Life Insurance Policies Listed by Industry Pros

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Confused about which life insurance policy to go for? Read on to find the different types of life insurance and decide which one will be the best for you!

Life insurance can be a bit daunting to deal with as it’s an acute reminder of your mortality. Moreover, the sheer number of different life insurance policies can also overwhelm your senses. However, having a life insurance policy has many irrefutable benefits. This is why you must learn the differences between the various types of life insurance policies. It will enable you to select the right policy, which will be beneficial for you and your loved ones.

Here are the different types of life insurance policies:

Term Life Insurance

As suggested by the name, a term life insurance policy offers coverage for a specific length of time, which is typically between 10 and 30 years. It’s also known as a pure life insurance policy as it doesn’t offer any cash value. Its sole purpose is to provide your beneficiaries with a payout or death benefit in case you die during the term.

Most term individual term policies offer a level premium, which means you pay the same amount each month. When the term expires, you can get a new policy, go without one, or opt to convert the current term policy to a permanent life insurance policy for all or part of your coverage.

Whole Life Insurance

This is a permanent life insurance policy, which offers coverage that lasts your whole life. In whole life policy, your level premium will remain the same for your entire life. Also, as long as you pay the premiums, your beneficiaries will get a guaranteed death benefit.

This policy also includes a cash value element; a portion of your premium is put into a cash-value account where it continues to grow on a tax-deferred basis. This means that you don’t have to pay any taxes on the gains. You can use your ever-growing cash value in several ways – use it to pay your premiums, borrow money against it, and even give it up to ease your finances in retirement.

Universal Life Insurance

This is a permanent insurance policy that provides lifetime coverage benefits and cash value of whole life policies. However, unlike whole life, the premiums of universal life are quite flexible. With such a policy, you can lower or raise the amount of premium, as long as it’s within the designated limits of the policy. This policy is ideal for anyone who can’t pay a fixed premium and want security as you can easily adjust it to your current financial conditions.

Final Expense Insurance

Final expense insurance covers end-of-life expenses such as burial and funeral costs only. Even though there is no investment component or cash value to these policies, the policy will remain in effect as long as you keep paying your premiums.

Older people often buy this type of coverage as it helps them protect their loved ones from covering such costs out of their pockets. The premiums as well as the death benefit of these policies are limited. After all, it’s not meant to offer years of financial support to the beneficiaries.

Simplified Issue and Guaranteed Issue Insurance

Medical exams are part of the application process of most life insurance policies. They allow the provider to determine your risk to insure. However, guaranteed issue and simplified issue policies don’t require any such medical exam. These programs are mostly tailored for individuals with serious health problems or older applicants who might not qualify for policies with medical exams.

Most final expense and some term policies are either simplified issue or guaranteed issue. If you apply for a simplified issue policy, you will have to fill out a health questionnaire instead of a medical exam. Meanwhile, you aren’t required to offer any medical information to qualify for a guaranteed issue policy. These policies usually have higher premiums and lower coverage because insurance providers have no way of assessing the risk involved in providing coverage.

Group Life Insurance

As suggested by the name, you buy this policy as part of a group. Usually, such policies are part of your employee benefits package or you can avail them via a member organization. Most group life insurance policies are term policies, but some companies provide permanent coverage as an employee-paid benefit as well.

Employment-based group policies provide comparatively affordable premiums because the employer buys them in bulk. Some companies even offer their employees with term coverages equal to their salary. Group policies can also be a simplified issue, but they might offer lower coverage.

Group life insurance might provide lower coverage, but it’s an affordable way to boost your life insurance protection. If your employer provides you with a policy, find out if it’s portable, i.e., if you can take the coverage with you in case you leave the job.

Now that you know the fundamentals of the different types of life insurance policies, you can use this information to choose a policy that will best suit your and your family’s interests.

 

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Top Rated Local Personal & Commercial Insurance Company / Agency

Sonoma County: Santa Rosa, , , , , CA

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Sebastopol, CA – Types of Life Insurance Policies Listed by Industry Pros