Individual Life Insurance Policies
An individual life insurance policy offers an individual a way to leave their loved ones with some financial security when they pass away. The beneficiaries will receive the money from the life insurance policy directly after you pass away. The beneficiaries will then be allowed to use the money from the policy as needed. This may be to pay for the education of a child, paying debt off, and paying the expenses for the funeral. There are different types of life insurance policies available from which to choose.
Term Life Insurance
For a person that is looking to cover specific financial obligations such as a mortgage or education expenses, a term life insurance policy is typically recommended. The term life insurance policy offers an affordable plan to protect your family should you pass away. One of the disadvantages of choosing this type of policy is there is no cash value accrued during the life of the policy. In addition, if the policy expires and an individual wishes to renew it, the cost can be quite a bit higher.
Whole Life Insurance
A whole life insurance policy is exactly what it sounds like. This policy is good for their entire life as long as the premiums are paid each month. Choosing a whole life policy comes with several benefits. The first is that the premiums for a whole life policy are fixed and do not increase as a person gets older. In addition, a whole life policy offers a cash incentive that is tax-deferred. This value increases over time and dividends of the policy can be used to make the value of the policy go up. One important thing to note if considering a whole life insurance policy is the fact that the cost of this type of policy is much more than a term life policy and there are no guarantees of dividends.
Universal Life Insurance
There are two types of universal life insurance. The regular universal life insurance policy comes with the same benefits as a whole life insurance policy, but with a lot more flexibility. Individuals are given the chance to change the death benefit of the policy at any time as well as the premium amount. Extra money can be paid towards the premium of the policy to add value. The cash value of the policy is based on a fixed interest rate, which will change periodically.
The other type of universal life insurance policy is the variable policy. This type of policy allows an individual to invest the cash value of the policy into mutual funds, stocks, and bonds that are professionally managed. Market conditions can greatly affect this type of universal life insurance policy.
Individual life insurance is something that everyone should consider. These policies allow a person to help protect their family members financially should something happen to them.
Frank Harrington discusses whole life vs term life insurance on InsuranceComparison.net.