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Different Types of Life Insurance

Different Types of Life Insurance

Different Types of Life Insurance

When you think of life insurance, the concept that comes to mind is that you pay a set sum each month and then, when you pass away, your family is paid out in a large sum of cash. However, not all policies are the same, and when you’re trying to decide which one to buy, you need to know the differences. Interested to learn more? The following are five types of life insurance.

Term Life Insurance

Term life insurance is the most common type of contract. With this coverage, you will pay the monthly premium and then, on your death, your family will receive a lump sum of cash. The contract usually lasts for a specific amount of time that’s decided by you. In most cases, this is between 1 and 50 years.

If your circumstances change during this time, you always have the option to sell your policy via a life settlement for a cash payout. This is an option if you are in need of cash, or you feel that you no longer need your life insurance policy. You can take a look at a guide online that will answer any questions you may have on how to start the process.

Variable Coverage

Variable life insurance is different from other policies as it allows you to borrow from the fund while you are still alive. These plans are much more flexible and you can also use the plan to invest. However, as with any investment, this will bring an element of risk. Variable life insurance is also more expensive than other policies because you are paying for administrative fees and for the insurance company to look after your investments. Make sure you read the small print before signing a variable contract. 

Whole Life Insurance

A whole life insurance plan is a little different from a variable plan in that you can withdraw from the fund at any time, your premiums are fixed, and the insurance company has total control over your plan. These policies, however, have very little flexibility on the policy’s face value and the premiums you pay. 

Universal Life

Universal Life policies are a type of permanent coverage that offers more flexibility than other policies. There are more options available for how you pay your premiums and you can adjust the value of the final death benefit payout. You also have the option to borrow against this policy, but any money that is owed upon your death will be taken from the death benefit. One of the benefits of a healthy lifestyle is that your rates will be based on your health status so the better health you are in the better your rates. 

Universal Variable Life

This policy gives you the most flexibility, although it also means you must know what you are doing if you are going to invest it. You can borrow, terminate or split the money between different accounts. People often use it to invest in stocks, but this holds obvious risks, and it should be reiterated that if you are not knowledgeable on investing or the stock market then you risk losing all of your money. The obvious benefit is that you will have the freedom to look after your own money. 

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Different Types of Life Insurance

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