There are three main life insurance products to consider when making a purchase. Your current life situation mixed with your long term goals should be analyzed prior to making a purchase. To better determine what makes the most sense for you we have outlined each product as well as its advantages.
Term Life Insurance
Term Life Insurance is generally available in increments of 5 years starting with a 10 year term up to a 30 year term. The length of the term is determined by the applicants age. For example a 30 year term may not be available to an applicant over the age of 60. The shorter the term the cheaper the premium.
Advantages of Term Life Insurance:
- Rates are much cheaper than permanent life insurance
- Rates are fixed during the duration of the term period
- Many term products are guaranteed convertible to permanent life insurance
Whole Life Insurance
Whole Life Insurance is the original life insurance. It is the most stable life insurance on the market. Premiums and cash values are fixed for life. They do not change and are not dependent upon outside markets.
Advantages of Whole Life Insurance:
- Whole Life policies have no expiration date
- Cash Values are guaranteed and outlined on the policy declaration pages
- Can be purchased at any age
Universal Life Insurance
Universal Life Insurance is generally speaking a newer product. It can be manipulated to fit a variety of needs. Originally designed as a way to diversify your investment portfolio, it has since evolved into much more.
Advantages of Universal Life Insurance:
- Can be paid up at a designated age
- Very high cash value potential if indexed properly
- Cash value can be borrowed against
Final Expense Insurance
Final Expense insurance also sometimes referred to as burial insurance is designed to cover end of life costs. These include things such as funeral services, medical expenses, credit card debt, etc. The average final expense policy face amount is $10,000-$15,000. This is sure to cover all or at least the majority of final expenses.
- Commonly referred to as burial insurance
- Used to cover funeral/final expenses as well as outstanding medical bills and/or credit card debts
- Average funeral costs $8,800
Long Term Care Insurance
Long Term Care insurance is more affordable when purchased at a younger age. It is designed to pay the insured a daily monetary amount that is used to pay for in home care or perhaps an assisted living facility when the time comes that it is necessary. This monetary amount may be higher or lower depending on the premium paid.
- Designed to pay the insured’s nursing home or home healthcare costs
- Less expensive when purchased at a younger age
- Rates are determined by age, state, zip code, and applicants health