Life insurance is an important investment for everyone but can be confusing with the different types of policies that are offered. Here is an informational guide on the three most common types of life insurance policies: Term Life Insurance, Universal Life Insurance, and Whole Life Insurance.
Term Life Insurance is the simplest and most affordable option. It offers coverage for a specific term, typically ranging from 10 to 30 years. If the insured individual passes away during the term, the beneficiaries can make a claim to get the death benefits. However, once the term ends, coverage ceases unless the policy is renewed-at a much higher rate.
Universal Life Insurance: This type of insurance offers flexibility in premium payments and death benefits. Policyholders can adjust their premiums and coverage amounts as their financial needs change. Universal life insurance also accumulates cash value, but its growth is tied to interest rates and market performance, offering potential for higher returns but also greater risk. Universal life insurance holders may also borrow money against their insurance policy at a low interest rate.
Whole Life Insurance: Also known as permanent life insurance, whole life provides coverage for the entire lifetime of the insured, as long as premiums are paid. It accumulates cash value over time, which can be borrowed against or withdrawn. Whole life insurance offers a guaranteed death benefit and fixed premiums, making it a stable long-term investment. The biggest difference between whole life and universal is that with whole life insurance you are not allowed to miss a premium payment which makes them less common than universal.
In summary, Term and Universal life insurance are the most common life insurance policies as whole life insurance is being fazed out. If you are looking for a more affordable option then term insurance might be right for you. If you want life insurance for your entire life and also the ability to build a stable financial investment, then Universal life insurance is most likely your best option.
Still not sure which life insurance policy is right for you? Give AZ Insurance Team a call today! (480)-535-5709.
Independent insurance brokerage located in Tempe, AZ. We offer auto insurance, homeowners insurance, life insurance, renters insurance, commercial insurance…
Disclaimer: Coverage will vary on state, insurance company, and type of policy.
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Information credit: https://www.progressive.com/answers/term-vs-whole-life-insurance/
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