Types of Life Insurance

Standard life insurance plans pay your family or your estate money when you die. The money can be used to provide for surviving family members and pay for outstanding medical bills and any burial costs. Some types of insurance plans can also serve as savings vehicles or retirement supplements in addition.

Term Life Insurance

This is the most simple type of life insurance and offers protection for your loved ones if you die. Term life insurance plans have a set period of time (typically 20 to 25 years from when they start) when they provide coverage. Policies that renew automatically each year and expire around retirement age are advised, since you will not have to worry about extending your current policy if you become sick. Some insurance policies guarantee a fixed premium each year, while others typically start with lower premiums but rise over time.

Whole Life Insurance

Whole life insurance is substantially more expensive than Term Life, but includes the ability to add to your policy’s “cash value,” which is the amount of the policy value in excess of the actuarial death benefit. Some people use these policies as a tax-advantaged way to build retirement savings or have their estate avoid probate taxes, as an investment. Evaluating the potential advantages of a Whole Life policy for retirement or estate planning purposes is extremely complex, and you should talk with a qualified insurance agent about the pros and cons.

Universal Life Insurance

Universal life insurance is a new kind of life insurance that allows people to either pay a large one-time premium at the beginning of your policy or pay your premium as variable installments that fall within a certain range. Evaluating Universal Life can be complex, so this is another type of insurance that requires analysis by a qualified insurance agent.

Accidental Death and Dismemberment

Is supplemental coverage that protects against accidental death or specific serious injuries such as limb loss or paralysis. Employers occasionally provide accidental death and dismemberment insurance as a benefit for employees that are required to travel.

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