When shopping for life insurance, you might be confused by all the options. Which ones earn cash? Which ones build cash value? What’s the best option for you? Learn more about the differences between the four main types of life insurance as you make this important decision.
Term Life Insurance
Term life insurance is easy to understand and affordable, but it offers coverage for only a limited time, usually anywhere from 10 to 30 years. If die before the policy term expires, your beneficiaries receive the death benefits to pay the mortgage, fund college or save for the future.
Whole Life Insurance
As long as you pay the premiums, a whole life insurance policy covers you for your entire life, which means your beneficiaries receive the death benefits whether you die this year or in 70 years. You can also borrow from the policy’s guaranteed cash value if you need money to pay expenses. The amount of money your policy earns depends on your specific policy.
Universal Life Insurance
Also known as a Flexible Premium Adjustable Life Insurance, this type of life insurance provides tax-deferred savings. The insurance company invests a portion of your policy into a savings account. You choose between a cheaper death benefit that pays the policy’s cash value or a more expensive option that pays the policy’s cash value plus the accumulated cash amount.
Variable Universal Life Insurance
With this life insurance, you pay for a death benefit and decide the premium percentage you want to invest. When you choose to end your policy, the appreciated money applies toward your policy’s premiums. Remember, though, that the invested money isn’t guaranteed and can lose value.
Some life insurance policies build cash value while others do not, and you can mix and match different types based on your needs. Talk to your insurance agent to discuss your specific needs and learn more as you decide which life insurance policy is right for you.
