What Life Insurance Policies Are Popular?

There are many types of life insurance policies out there for you to choose from. The ultimate goal of life insurance is to protect your loved ones when you die. However, with so many variations, many people are confused about the terms of life insurance and which will work best for their needs. Here are some of the most popular policies:

Whole Life Insurance

One of the oldest types of insurance is whole life. Whole life insurance policies have been around for a very long time and still remain a popular option. With this type of policy, you pay your premium for as long as you want to be covered.

With your premium, the company makes investments and your policy grows in cash value. While the return is not much, you are at least getting something back on your money. Whole life insurance is generally a little bit more expensive because of the cash value aspect of the policy. Many investment gurus have lobbied that this type of insurance costs more than it is worth. 

Term Life Insurance

Term life insurance covers you for a predetermined period of time. A popular term is 20 years. This allows you to be covered during the riskiest part of your life. When you are getting started in life, you owe more money than you will later. You get a mortgage, car payments, credit card debt, and student loans. If you were to die during this time period, your family would be devastated financially. Term life insurance allows you to be covered during this critical time without paying as much as you would for whole life insurance.

This is also a popular choice among investors. They argue that you can save the difference between term and whole and invest it in the market. The return that you realize over the 20 years will be much greater than what you could get from the whole life policy. Of course, the success of this method has a lot to do with personal discipline as well. 

Universal Life Insurance

Universal life policies are very similar to whole life in theory. They contain the investment and mortality benefit aspects of whole with a few changes. With whole life, it is similar to investing in a mutual fund that does not disclose the details of your investments. They take the money and you do not know which percentage is going to investments, insurance or administration.

With universal life, you will know everywhere that your money is going. You will even have several options to pick from for investments. This actually is a good combination of whole and term in that it allows you to invest more.

Accidental Death Insurance

This is a very basic type of life insurance policy that only covers against accidental deaths. It would not cover you as a result of health problems or natural causes. This is popular because it is less expensive than traditional forms of life insurance. Just be aware that you are sacrificing coverage and your family is at risk if you die from non –accidental causes, such as cancer or a heart attack.

blog comments powered by Disqus