Most people view life insurance as an optional form of insurance. As a result, nearly 106 million people don’t have it.
While you don’t have to buy life insurance, you should. Life insurance is vital insurance coverage designed to protect your family. But there are different kinds of life insurance.
This article will discuss three of the most common types and how they work. Keep reading to learn more.
Term Life Insurance
Term life is among the various types of life insurance policies people buy, and this kind is popular. When you purchase term life, you choose several things:
- Term length
The policy offers a guaranteed payout if the policyholder dies within the term. The term might be ten years or longer. However, your beneficiaries only receive the money if you die within the term.
The policy ends if you outlive the term you selected. You might wonder why people purchase policies that might not offer payouts.
Most people who purchase term life insurance buy it to protect their families when they need it.
For example, you might buy it while your children are young. Then, your spouse could use the money to support the kids since you no longer can.
Whole Life Insurance
Some people want a guaranteed payout regardless of when they die. People can purchase whole life insurance for this purpose.
Whole life costs more than term, but it offers a guaranteed payout. The policy doesn’t have a term or an expiration. Instead, it lasts as long as the policyholder lives.
When buying whole life, you still choose the amount and the beneficiaries. However, you don’t choose a term.
Another benefit of whole life is the policy accumulates cash value. As a result, you can borrow from the cash value if you need money.
Because of how they work, many people buy these policies as investments.
Final Expense Insurance
The average cost of a funeral in 2021 was $7,848. While this might not be a lot of money to some people, it is to others. Of course, people often use their life insurance proceeds to pay for these expenses.
One unique life insurance policy to consider is final expense insurance. This insurance also goes by other names, including funeral insurance. Of all the insurance policies you can buy, this is probably the most affordable.
The benefit of funeral insurance is it covers the policyholder’s funeral costs, which is helpful when someone dies. You can choose the amount of coverage for the policy. However, these policies are generally $20,000 or less.
They also offer a guaranteed payout as long as the policyholder is current on the required premiums.
Learn More About These Kinds of Life Insurance
Learning about the different kinds of life insurance can help you understand that you need insurance coverage and which type to buy. After reading this, you can decide which type you want.
Contact us at USA Life Insurance Services to learn more. We can explain your options and offer quotes for coverage.