Insurance doesn’t have to be complicated, but it is often hard to wrap your head around all the options when presented with a brochure or list. When considering life insurance, whole life is just the beginning of the options you have to protect your spouse and family. This article will explore some basic options – once you read through them, we encourage you to reach out to our team to learn more.
Common Types of Life Insurance
Whole Life Insurance: Whole life policyholders receive straightforward coverage plans with fixed premiums and a guaranteed cash component. Anyone looking for stable, predictable costs and guaranteed growth should consider whole life insurance to secure death benefits and a savings component.
Ordinary Level Premium Whole Life Insurance: Similar to whole life insurance, ordinary level premium whole life policies offer lifelong coverage and guaranteed cash value. However, the key difference is that premiums remain strictly level throughout the policyholder’s life. These fixed premium costs do not increase with age or peak later in life.
Limited-Pay Whole Life Insurance: Limited-pay whole-life policies have a shorter premium payment period, but there is no limit on how long the coverage lasts. Policyholders make payments for a limited time, such as 10, 15, or 20 years, after which no further premiums are required, yet the coverage continues for life.
Adjustable Life Insurance: Adjustable life policies offer flexibility in modifying both premium payments and death benefits over time. Unlike whole-life policies with fixed terms, this allows adjustments based on changing financial circumstances. Despite similarities to some basic policies, the primary defining feature is its flexibility to adapt coverage and costs as needed.
Universal Life Insurance: Universal life insurance adds an interest-sensitive cash value component to the flexibility of adjustable life insurance. While it also allows for adjusting premiums and death benefits, the cash value earns interest based on market rates, often with a minimum guaranteed rate.
Current Assumption Whole Life Insurance: Current assumption whole life insurance combines elements of traditional whole life and universal life insurance. It offers level premiums but adjusts them and the interest rate based on the insurer’s economic assumptions.
Variable Life Insurance: Variable life insurance gives policyholders the ability to take control and invest the cash value in various subaccounts, such as stocks and bonds. While this provides higher growth potential, it also comes with greater risk, as the cash value can fluctuate with market performance. It is best suited for those comfortable with investment risks and actively managing their policy.
Variable Universal Life Insurance: Variable universal insurance combines investment options with flexibility. Policyholders can adjust their overall plan over time while investing the cash value in various subaccounts.
Joint Life (First to Die) Insurance: Joint life insurance covers two individuals and pays out upon the death of the first insured person. Many couples and business partners use this insurance to maintain financial stability for the surviving partner in the event of an accident. These policies can often be more cost-effective than two separate policies, but the surviving individual must seek new coverage if additional insurance is needed.
Survivorship (Second to Die) Insurance: Survivorship insurance covers two individuals and pays out only after both have passed away. Commonly used for estate planning, it helps provide funds for heirs, taxes, or other expenses after the second death. Premiums are generally lower, as two individuals must pass away before payment is issued.
Did one of these insurance policies catch your eye? The team at Anderson & Associates is eager to hear your insurance goals and inform you of the best options currently on the market. Describe your situation and tell us which policy you think fits, and we can help steer you in the right direction. Contact our team today to get started.
