Life Insurance: identifying the three main types & how to choose one
There’s often a catalyst that sparks the thought: “I need life insurance.” You don’t suddenly get an urge one Sunday afternoon as you’re enjoying the summer sunshine in your back yard to call a broker and invite them over to discuss Term Life Insurance.
Typically there are some major life events that brings life Insurance into our minds, such as:
buying a home
having kids of your own
starting a new business
These events drive us to consider what would happen to our loved ones in the event of us, hence our salary, not being there for them.
As we grow older the realization of our own mortality increases our sensitivity to being without a good life insurance policy. A simple fall, the weight of illness or even the burden of DIY and household chores can have us thinking …”what if…” ~ we often don’t like the answer.
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Let’s look at life insurance from another angle. Would you get behind the wheel of your car without auto insurance, or own a home without Fire protection?
Of course not, yet many would argue that life’s highway is much more perilous than any interstate freeway.
But we all make certain our vehicles are insured, so that they may be repaired, our medical bills paid and life to return to normal if an accident were to occur.
In a sense, Life Insurance works the same way: it ensures that your family can carry on down life’s highway safely in the event that you’re not there to steer them safely.
Don’t leave life insurance until it’s too late to act…
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The three types most common are:
Term Life Insurance
Whole Life Insurance
Universal Life Insurance
The differences between each type are many; for the sake of simplicity and to provide purely an inkling into which is the best life insurance cover for you, we’ll simply highlight the main points here.
Should you need any further information, one call to our office to explain the type of policy most suitable for your needs will give you an even better understanding than the simplified overviews outlined, here.
Term Life Insurance
Of the three, term life insurance is perhaps the most common, its ease of understanding playing no small part in this type of policy’s popularity. You take out term life insurance with an agreed premium over a set period; as long as you maintain the payments, if anything happens between the start and end date, the policy will pay out upon your demise. As your children start High School, for example, you may feel comfortable taking out a policy for as few as ten years. If anything should happen to you whilst the policy is live, the funds, payable as a lump sum to a named beneficiary Tax Free, will be there to allow your children to finish their education. Should you survive the policy, there’s no residual cash account as is the case with both the Whole and Universal Insurance types we’re looking at next. The policy expires after the final premium has been paid and your sole consolation is that your family didn’t need to claim on it.
Whole Life Insurance
Whole life insurance, as the name suggests, covers you for your entire lifetime and is for an indefinite period of time. The premiums, on the other hand, are fixed for the life of the policy and you can even increase your monthly contributions into the future to be able to purchase more insurance if need be, or invest more heavily in the dividend account. The dividends as well give you a great degree of flexibility, stability and constantly positive rates of return. You can either accept dividends in cash when they’re issued, you can leave them on deposit for future use or you can offset the price of future premiums against the value of the dividends, which can be left in your account for that purpose.
Universal Life Insurance
The last of the three comes with the greatest degree of flexibility. The payoff is, however, that there’s a greater risk involved due to the nature of funds your premiums are invested in. The cash account that accompanies Universal Life Insurance can benefit from interest earned at market rates for a greater payout upon maturity. There are other options, too, depending upon specific details within your policy. You can amend your premiums to suit current affordability, miss payments altogether or even pay in lump sums should the opportunity present itself.
Call us Today for your Free no-obligation review of your Life Insurance Needs… We are insurance brokers and have access to all the companies who carry Life Insurance.
What are the next Steps?
Always speak to a professional about life insurance coverage…
Different policies do have varying levels of tolerance, so it’s worth checking exactly what you can and can’t do with a Universal Life Insurance policy.
And always double-check with your broker the degree of exposure to risk within each policy before you sign on the dotted line.
For further information about the types of Life insurance that put your family first, please feel free to contact our office where a friendly expert will help you drill down to discover which policy is best for you.
If you wish to carry out a little research for yourself beforehand, please feel free to download our “Life Insurance buyers guide” found in the subscription area below. It has a wealth of information for your review.
You can then call our office in confidence to run through any details of which you’re unsure of and, when you’re happy with the advice you’ve been given, we can move forward from there. We look forward to your call.
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