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  • Writer's pictureBlayne Jacobson

Understanding Life Insurance:

Updated: Jul 3, 2023

Life insurance is a crucial investment for anyone who wants to secure their family's financial future. It can provide peace of mind knowing that your loved ones will be taken care of financially when you are no longer there. But with so many types of life insurance policies available, it can be overwhelming to decide which one is right for you. In this post, we'll discuss the different types of life insurance policies and their benefits and coverages.


Term Life Insurance:


Term life insurance is the most popular and straightforward type of life insurance. It provides coverage for a specified period, typically 10, 20, or 30 years. If the insured dies during the term, the beneficiaries receive a death benefit payout. The premiums for term life insurance are typically lower than other types of life insurance policies, making it an affordable option for many people.


Benefits:

  • Provides coverage for a specific period of time

  • Offers lower premiums compared to other types of life insurance

  • Provides a death benefit payout to beneficiaries in case of the insured's death


Whole Life Insurance:


Whole life insurance provides coverage for the entire life of the insured. The premiums for whole life insurance are higher than term life insurance, but the policy also has a cash value component. This means that a portion of the premiums paid goes towards building up a cash value that can be borrowed against or used to pay future premiums. The death benefit payout is guaranteed and remains the same throughout the policy's life.


Benefits:

  • Provides coverage for the entire life of the insured

  • Has a cash value component that can be borrowed against or used to pay future premiums

  • Offers a guaranteed death benefit payout


Universal Life Insurance:


Universal life insurance is a type of permanent life insurance that provides flexibility in terms of premiums and death benefits. It allows policyholders to adjust their premiums and death benefit amounts over time. Universal life insurance also has a cash value component that earns interest based on current market rates.


Benefits:

  • Offers flexibility in terms of premiums and death benefits

  • Has a cash value component that earns interest based on current market rates

  • Provides permanent coverage for the entire life of the insured


Variable Life Insurance:


Variable life insurance is a type of permanent life insurance that offers investment options to policyholders. It has a cash value component that can be invested in various funds, including stocks, bonds, and mutual funds. The value of the cash value component can fluctuate depending on the performance of the investments. The death benefit payout is guaranteed, but the cash value component is not.


Benefits:

  • Offers investment options to policyholders

  • Has a cash value component that can be invested in various funds

  • Provides permanent coverage for the entire life of the insured


Guaranteed Universal Life Insurance:


Guaranteed universal life insurance is a type of permanent life insurance that offers a guaranteed death benefit payout but does not have a cash value component. The premiums for guaranteed universal life insurance are typically lower than other types of permanent life insurance, but higher than term life insurance.


Benefits:

  • Provides a guaranteed death benefit payout

  • Offers permanent coverage for the entire life of the insured

  • Has lower premiums than other types of permanent life insurance


Not everyone will fit in to each of these policies above due to age, weight, or medical issues but here are some additional types of life insurance:

  • Final Expense

  • Guarantee Issue



Choosing the right life insurance policy can be overwhelming, but it's essential to have adequate coverage to protect your loved ones. By understanding the different types of life insurance policies available, you can make an informed decision and feel confident that you are covered in case of the unexpected. Don't hesitate to reach out to our agency for assistance in selecting the best coverage for your needs.

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