Losing a loved one is a very difficult experience, and it can be even more complicated when there are family members left behind unprotected and without support. For example, if you are a father of a one-income family, you might be leaving your children in a vulnerable place unless you decide to get a life insurance policy to provide for them financially in case of your untimely death. You can rest assured that your family will be sufficiently supported until they are able to become independent.
One of the first things to think about when purchasing life insurance is which type to buy. These are popular forms you can choose from.
This is a policy that the premium rate is guaranteed for a certain amount of time and at the end of this period, the policyholder may choose to pay at a much higher rate that increases annually or close the contract. This is a very simple type of insurance and quite affordable in comparison to others. This is why it is also the most popular among those who purchase life insurance.
As opposed to the first type, this insurance policy will keep you covered for the rest of your life. You will be paying the same amount in premium, though you may decide to pay it off earlier or within a certain amount of time only. They are normally more expensive than term life policies, but policyholders benefit by receiving annual dividends that you may receive as cash or to offset premiums.
The features of this policy type resemble whole life policies in the way that they have no set time periods. However, it offers policyholders more flexibility. They may decide to change their death benefit and the cash value at any time. Premiums will also adjust accordingly, and there are ways to plan payment dates to suit customers’ preferences.
There is, however, a risk of your policy being underfunded if the cash value does not earn enough to pay for rising premium costs. You will then have to pay extra to keep the policy valid. Lastly, with this flexibility comes a higher complexity that is not seen in the first two types of life insurance. It is not as clear-cut all the time as to how long it is valid and how much should be paid.
You may get a deeper understanding of the details of these life insurance policy types by setting an appointment with one of our agents. They will be willing to answer your questions and help you identify which type suits you and your needs best, as well as which is the most cost effective for you. This way, you find the right insurance for you and your family and you are at peace knowing they are covered at all times.