Life insurance is something everyone should invest in but no one wants to think about. Whether a person has the policy to make sure their children are protected or it is needed to cover the duration of a home loan, understanding the options regarding life insurance is important. Without insurance, a person’s family would be left to take care of any debts or obligations left behind. It is imperative that each person carefully explore their options for life insurance. Here are the three basic forms of life insurance.
1. Term Life
Guaranteed acceptance term life insurance is the simplest of the available options. It offers a death benefit payment covering a certain time frame. A person may invest in a 30-year policy to cover the term of a mortgage without a huge expense. These policies expire when with the time frame and hold no cash value. This allows them to keep a lower cost and remain affordable for most people.
2. Whole Life
A commonly used form of life insurance, a whole life policy will allow a death benefit to be paid out at the end of a person’s life as long as premiums are continually paid on time. As payments accrue up to certain amounts, the cash value is assessed and available from these policies.
3. Universal Life
This is a more expensive policy but can offer excellent benefits if managed wisely. A universal life policy will pay out a death benefit at the end of life, regardless of the time frame. As cash values accrue, payments can be reevaluated and sometimes are stopped altogether. Because the cash is invested, however, keeping up with market investments and the cash’s fluctuating value must be undertaken cautiously.
Each person needs to carefully consider the options before choosing a life insurance policy. Customers should consult with an agent or legal counsel to make a thoughtful and well-informed decision.