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The best life insurance covers everything you need in your present and protects your future as well. If you are unfamiliar with life policies and their terms, let’s look at what you must know before purchasing a life insurance plan.
What is it?
At its core, life insurance offers a buyer financial protection from unforeseen circumstances that can negatively impact a person and their family’s lives. Insurance companies provide beneficiaries a sum of money known as a death benefit upon the insured person’s passing in exchange for receiving monthly payments from the life policy buyer.
What kind of life policies exist?
Term life and permanent life insurance are the two main types of life plans. Consumers purchase term life plans with a set period (term) of coverage for the policy. The term can last one year, five years, two decades, or more. If the insured person dies during the term, the policy’s beneficiaries receive the death benefit payout. Term policies typically consist of level death benefits where the value remains the same over the entire time the policy remains enforced. Before buying the best life insurance for yourself, ask if you can renew your term policy beyond the endpoint without undergoing additional medical exams or underwriting. Furthermore, some term life policies can convert to permanent life plans after the term ends. Certainly, the conversion to permanent life insurance does increase the amount due on premium payments.
Permanent life insurance covers your entire life. So, naturally, this type of insurance will require more expensive payments to the insurance company to keep the policy active. Whole life insurance is the most common type of permanent insurance. It carries fixed premiums and a fixed death benefit. When you pay premiums toward whole life insurance, you build tax-deferred cash value and will not have to pay taxes on the interest it earns. The money accumulated gives the policyholder multiple options. You might use it to take a loan against the policy, pay your premiums, or withdraw cash. Of course, if you fail to return the loan money before the insured dies, loans against the policy (and withdrawals) will reduce the death benefit.
Universal Life insurance is another form of permanent life insurance that offers flexible premiums and a flexible death benefit as your needs change. However, there is a downside. The policy cash value’s interest rate is also subject to change but can never decrease lower than a guaranteed minimum interest rate. Additionally, if investments disappoint, your cash value can diminish, and premiums will increase. Three main types of universal life policies exist: guaranteed, indexed, and variable.
Guaranteed universal life policies are the least uncertain option because they ensure a fixed interest rate on cash value growth. Yet, if you miss a payment, the insurance company might cancel the policy. Indexed universal life plans link your cash value to a market index such as the S&P 500. This type of policy also caps investment losses and gains. Variable universal life plans tie cash value to a more diverse investment portfolio that might include stocks, indexes, bonds, or money market accounts. As its name implies, the variables in these policies can give you a high degree of reward but also produce significant losses.
How do I determine what is the best life insurance?
Calculating where your money goes each month is essential to finding the best insurance for yourself and your family. You can start by creating a list of your monthly expenses, how much your family needs to continue living the lifestyle they have become accustomed to living, and your family’s future needs.
Where can I purchase a life policy?
Once you have completed these calculations, you will want to contact a licensed professional. Call Empower Brokerage at (888) 539-1633 to help you find the best insurance and learn more about your options. Our friendly licensed agents eagerly wait to assist you in finding financial peace of mind with the right policy.
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Life Insurance Questions?
We hope that this information on the best life insurance is useful to you.
If you’d like to learn how we can help you plan your retirement, call Empower Brokerage at (888) 539-1633 to speak to one of our Life and Annuity experts or leave a comment down below.
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