Life insurance is one of those things you may not think about often, but it’s important to make sure your family is taken care of if something were to happen to you. Many people don’t have life insurance, and they may be wondering if it’s worth it or whether they need it at all. Life insurance can be complicated, but it does not have to be daunting. It can be simple. Read on to learn about different types of life insurance and how to choose which is best for your family.

Three Basic Types of Life Insurance

Type of Insurance

Term life insurance is a type of life insurance that comes with a defined term. The term is the amount of time for which the company will pay the benefit upon the death of the insured. Term life insurance is typically less expensive than permanent life insurance, but coverage usually doesn’t last forever.

Term life insurance is a common type of life insurance that provides coverage for a specific period, typically 10, 20, or 30 years. This type of policy is often the simplest type of life insurance policy to understand.

Whole Life Insurance

Whole life insurance is life insurance that covers your whole life. The insurance company assumes responsibility for paying any cash benefits, or death benefits, upon the death of the insured. The insurer does not expect to make a profit on the policy, preferring instead to collect premiums and invest them in securities. The income generated by the invested premiums then pays the policyholder’s death benefit.

Whole life insurance is the easiest way to add affordable life insurance protection. All policies offer you the peace of mind you need knowing that your family is protected in the event of your untimely death. Whole life insurance works differently than term life insurance in many ways, including the fact that, unlike term policies, whole life insurance policies never expire.

Universal Life Insurance

Universal life insurance is a type of life insurance policy that is designed to last a lifetime. It accumulates cash value throughout the life of the policy, providing additional death benefits upon the death of the insured. These cash values are the accumulation portion of the insurance, and when the insured dies, the cash values are paid out to the beneficiaries.

Universal life insurance, also known as permanent life insurance, is a type of life insurance where premiums never expire, and cash value builds in a tax-deferred account. The policy owner can access this cash value, but death is not the only way to reach it; the policy owner can also borrow against it or withdraw it.

Other Types of Life Insurance

Variable Life Insurance

Variable life insurance is a relatively new product that allows people to invest their premiums and invest earnings and lets them build a customized plan. The policyholder chooses the insurance amount and time horizon they want and then chooses from a range of investment options, known as fund options. The funds chosen can be mutual funds, private funds, or exchange-traded funds. The options will vary depending on where you are in life and your long-term goals.

Credit Life Insurance

Credit life insurance is a type of life insurance that is mainly known in the insurance industry as credit life. It is a special type of term life insurance that covers you for death while making payments on debts. The most common type of credit life insurance is credit disability insurance, which typically covers you in the event of death due to an accident or sickness. However, there are other types of credit life insurance, such as credit accident and credit sickness.

Mortgage Life Insurance

A mortgage life insurance policy is a type of policy taken out to protect your mortgage and your family. It works in conjunction with your current life insurance policy, allowing you to borrow against your policy’s cash value. The insurance is paid out as a tax-free loan, and you can then pay it back with your regular payments. It’s important to remember that your rate can be significantly higher than what you’re paying now, and this loan may not be around forever.

Indexed Universal Life Insurance

Indexed universal life insurance offers a host of benefits that set it apart from traditional whole-life policies. While indexed universal life policies offer tax advantages, they also offer more when it comes to building your wealth. While most whole-life products only offer policy guarantees, indexed universal life policies offer bonuses. These bonuses are bonuses you accumulate over time and can later use to supplement your policy or policy proceeds. These bonuses can increase your cash value by as much as 1.5% to 3% each year.

Life insurance is something worth considering. As with any insurance, there are pros and cons to consider. As with any decision, you should read the fine print and consult professionals.