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How to Choose a Life Insurance Policy

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The reasons for purchasing life insurance are obvious. A life insurance policy is designed to protect your loved ones’ financial futures and quality of life in the event of your death.

Sorting through the various types of policies and coverage can seem overwhelming. Read on for answers to the most common questions about choosing guaranteed acceptance term life insurance.

The three most common types of life insurance policy are term life, whole life and universal life policies. All three of these types pay a guaranteed amount to the beneficiary upon the death of the policy holder.

Term Life Insurance

Term life insurance is purchased for a finite period of time. The coverage terminates at the end of the term. Most term life policies are purchased for a period of five to thirty years. These are the cheapest types of policies and do not accrue any cash value.

Whole Life Insurance

Whole life insurance, in contrast, provides coverage for an entire lifetime rather than for a set duration. Whole life policies are significantly more expensive but provide more security, as there is no danger of the policy expiring at an inopportune time. Whole life policies also build cash value over time. Depending on the type of coverage, it’s possible to borrow money or cash out the policy after a certain amount of covered time.

Universal Life Insurance

Universal life policies, also referred to as cash value life insurance, are also designed to cover the insured for a lifetime. However, universal life policies divide the premiums paid into savings and life insurance. What happens to the savings part of the insurance payment depends on the type of policy. The savings portion are typically tied to investments, which introduces an element of risk.

If you still aren’t certain which type of policy to buy, consider consulting with a professional. An insurance agent or financial advisor can help you wade through the various insurance options and choose the policy that will best serve you and your family.

 

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Robert B. Wilfong

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