Life insurance is diverse because individuals have different needs. Different types of life insurance policies vary in how long they’re active, the demographic they’re best suited for, and how they function.
What Are The Types?
At the fundamental level, life insurance can be broken down into term life and permanent life.
Term life policies are active between 10-30 years. After the term expires, beneficiaries won’t be able to get the death benefit. These policies have much cheaper premiums than permanent life policies.
Permanent life is active for life. No matter how long it has been since you signed up, your loved ones will receive the death benefit. Premium costs are higher, but these policies come with other benefits, such as cash value accumulation.
Both forms come with subtypes that work in their own unique ways.
What Are The Different Types Of Term Life Policies?
Term life comes in these forms:
- Level premium
- Yearly Renewable Term (YRT)
- Decreasing term
With level premium, your premium costs are fixed. However, these will be higher due to accounting for future inflation and rising costs of insurance.
YRT lets you renew your policy annually without showing proof of insurability. There’s no specified term, but premiums will increase as you age.
Decreasing term policies are typically purchased in conjunction with mortgages. The death benefit decreases over time, but its value will be roughly equal to your mortgage’s outstanding balance.
What Are The Different Types Of Permanent Life Insurance?
Permanent life insurance policies can come in two forms:
- Whole
- Universal
Whole life policies include:
- Guaranteed issue
- Simplified issue
- Single premium
- Final expense
Universal policies include:
- Indexed
- Variable
Whole life has fixed premiums, while universal life has flexible premiums.
Guaranteed issue does not require any medical underwriting, which makes it ideal for those who are likely to be rejected from other policies due to advanced age or poor health.
Simplified issue limits medical underwriting to a questionnaire, instead of a medical exam. This and guaranteed issue don’t have a cash value component.
Single premium lets you purchase a policy with a single lump-sum payment instead of having to pay monthly premiums.
Final expense is lower cost and easier to qualify for, but the death benefit is lower. This is often purchased to cover funeral costs.
As for the two forms of universal life insurance, the cash value can build faster because it has investment features. Variable takes a portion of what you pay into premiums and deposits those funds into an investment sub-account similar to a mutual fund. Indexed, on the other hand, lets you benefit when the stock market is performing well.
We’ll Give You The Guidance You Need
Life insurance can seem overwhelming at first glance, but at Senior Health Solutions, we do the hard work for you. You won’t need to worry about whether you will make the right decision. We are happy to get you the policy that fits your needs to a tee – and at the lowest price. Call us today at (636) 244-4415.
