Questions to consider when picking a life insurance type include the following: First, Do you want to choose the policy length? Whole and universal life policies last until your death, as long as you pay your monthly premiums.
Term life insurance, on the other hand, is set for a specific number of years. This can be beneficial if you only want coverage while your dependents live with you.
Do you want living benefits? All life insurance have death benefits, but life benefits allow you to cash out a portion of your policy. For example, you can take out cash from your policy if you develop a terminal illness and need to pay health care costs.
Life insurance companies reduce your death benefits by the amount you take for living benefits. Term insurance does not offer living benefits.
Is the cash value guaranteed? Whole and universal life insurance policies allow you to tap into the value of your policy after a certain number of years. You can lower your premium obligation or skip premiums altogether once you are paid up.
Is the death benefit amount fixed or flexible? Term and whole insurance policies have a fixed death amount – how much your family will receive – while universal policy payouts will depend on how well the stock market performed.
Does it build or gain value over time? With the exception of term insurance, most policies increase in value over the years.
Are premium payments fixed, flexible, or increase over time? Term and whole life insurance have set monthly premiums, while variable and universal life insurance have flexible terms.
Can you afford the premiums? Term life is the most affordable type of coverage since it is temporary.
You should also make sure that your insurance provider is a reputable company.