Life Insurance Options Explained

When planning our financial future, we think about how much income we need to make to sustain the lifestyle we want during retirement. This means saving and investing money into 401(k)s, IRAs, treasury bonds, crypto, and real estate. Yet, we often forget about the necessity of life insurance. The harsh truth is that we may pass at any time. The world is full of dangerous things that can lead to an accident and loss of life. Ensuring that your loved ones have some financial help if you were to pass away gives everyone peace of mind. Life insurance provides financial help and peace of mind. Yet, there are plenty of types of life insurance that can make it challenging to choose which to purchase. Below, we will list the types of life insurance and give a brief description of each.

• Term Life: This type of policy is as it sounds like. It gives you life insurance over a specified number of years like 10, 20, or 30 years. If you were to lose your life during the coverage period and within the coverages of your insurance, your family would receive financial compensation.

• Whole Life: Whole life is coverage for the entirety of your life. For as long as you live, you will have life insurance. The monthly insurance premium will always remain the same from the time you sign up until the end of your life.

• Universal Life: Universal life is an alternative version of whole life insurance. It offers you coverage throughout your entire life, but the premiums and death benefits may be flexible.

• Burial/ Funeral Insurance: This type of insurance only covers burial and funeral-related costs. It cannot be used for any other purpose and the coverage is whole life.

• Survivorship Insurance: Survivorship insurance is a typically whole life plan that has two individuals on the plan. The death benefits are only to be paid out when the second person passes away.

• Mortgage Life Insurance: Mortgage life insurance is based on your home’s mortgage. It is designed to cover the cost of your insurance if you were to pass away. Over time, the death benefits will decrease since the mortgage balance will be decreasing. The monthly premium may fluctuate as such too.

• Credit Life Insurance: This insurance is there to cover the cost of a loan if you pass away. This is an optional coverage option that is typically combined with other insurance products.

• Supplemental Life Insurance: Supplemental insurance is designed to fill in the gaps of your primary life insurance policy. It is typically offered by employers and is employee-paid.