Happy Life Insurance Day!
With all the different types of life insurance available it can be confusing. SFG is here to help you and educate you. Life insurance is “insurance that pays out a sum of money either on the death of the insured person or after a set period.” It can help pay for a funeral or settle any debt you may have upon your passing. Life insurance is there to protect you and your family. So let’s break down the different types of life insurance.
Term Life
Term assurance is life insurance which provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires, coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments or conditions. If the life insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis over a specific period of time.
Whole Life
In this more traditional life insurance policy, the premiums stay the same over the life of the policy, which stays in effect until your death, even after you’ve paid all the premiums. A cash reserve is built up, but you have no control over how it’s invested.
Whole life offers both a death benefit and cash value, but is much more expensive. Some of the money you put into a whole life policy goes towards a savings program, which then earns interest or is put towards other investments. In the end, a whole life policy that’s been in effect for 25 years will provide a much larger benefit than a term policy.
Variable Life
Variable life insurance policies are the most expensive because they build up a cash reserve that you can invest in any of the choices offered by the insurance company. The value of your cash reserve depends on how well those investments are doing. In a period of economic growth, your investment can grow quickly. Since these policies are dependent on the stock market, you can lose value as quickly as you gain.
Universal Life
This is a flexible policy which features both term and whole life. You can vary the amount of your premium with universal life insurance policies by using part of your accumulated earnings to cover part of the premium cost. You can also vary the amount of the death benefit. For this flexibility, you’ll pay higher administrative fees. However, the premium is usually inexpensive compared to whole life, but higher than term life insurance.
Our Licensed Agents here at SFG can help you and educate you through what life insurance policy is best for you. You can call to schedule an appointment at 865-777-0153 or toll free at 1-800-677-0153.