Types of Life Insurance Policies

A typical life insurance policy can come in a great number of shapes and sizes. If you're choosing a life insurance policy for the first time, it's important initially to decide which type of life insurance policy is ideal for your specific situation. Life insurance policies can generally be broken down into two categories - term and permanent.

Term life insurance, which can be a more popular type of policy of life insurance, provides coverage for a specific length of time which you choose; while permanent life insurance covers you in perpetuity. We find that term life insurance is right for many people, but if you have questions about whether you should purchase term or permanent life insurance, you can always contact one of our licensed agents for assistance on choosing the right type of life insurance policy for you and your family.

What is a Term Life Insurance Policy?

Term life insurance policies are generally between 10 and 30 years in length. These types of life insurance policies provide both a fixed premium (the amount you'll pay) as well as a fixed payout (the amount we'd pay your family). Term life insurance is a popular option because it boasts benefits that are attractive to people of most ages and situations. These benefits include:

• Affordability - Not only will you pay the same rate for the entire term, but you can also choose a coverage amount and term length to fit your budget.
• Low maintenance - Term life insurance allows you to "set it and forget it". As long as you pay your premiums, your policy continues throughout the designated time period.
• Guaranteed Payout - Your death benefit is fixed, meaning that beneficiaries receive the payout that you chose at the beginning of your term. More options - You can choose the term policy with the time limit and coverage amount that is ideal for your current and future needs.

What is a Permanent Life Insurance Policy?

A permanent life insurance policy is one of a variety of policies of life insurance meant to give you life-long protection. One familiar type of permanent life insurance is one you probably have heard of: Whole Life Insurance. But, there are additional types of permanent life insurance policies available that you can customize. Permanent life insurance policies are designed to cover you until your death. But, with any life insurance purchase, it's important to find life insurance coverage that fits your individual needs.

• Whole Life Insurance - Whole Life Insurance is a permanent policy, which covers you for a lifetime with fixed premiums and guaranteed protection for your loved ones that lasts a lifetime. Additionally, with whole life insurance you earn guaranteed cash value, which you can use however you want.
• Universal Life Insurance - Universal life insurance is also a permanent policy where the insured is protected with a guaranteed death benefit. Funds that are in the universal life insurance policy's savings component, are invested to provide the policy holder with cash value.

Things to Consider When Choosing a Life Insurance Policy

Once you decide upon the type of life insurance, you'll need to consider for how long you'll need a policy to be in effect and the coverage amount that you'll need. Answering these questions begins by considering the following.

How long do I need a life insurance policy?

The length of your life insurance policy depends on how long you anticipate financially supporting your loved ones. Ask yourself this when thinking about how long you may need life insurance...

• Do I have a mortgage or other debt?
  If you have debt, the length of time it will take you to pay it off can be a helpful indicator in the term length of your policy.
• Who depends on me?
  If you know how long you'll be depended on for financial support from a spouse or children, it can help you identify the length of time you'll need a term policy.
• What can I afford?
  The dollar amount of life insurance coverage you need can affect your term length. If you need a high amount of coverage, you may want to consider a shorter term length to fit your budget.

How much life insurance coverage do I need?

Some experts will tell you that the answer is between 7 and 10 times your salary, but it can vary tremendously based on your individual needs. Ask yourself this when considering how much life insurance do I need...

• How large are my debts?
  If you have a mortgage, student loans, business loans or any other debts, a good beginning can be to calculate the total amount of your outstanding debts.
• What life events do I want secured for my family?
  You may want your death benefit to assist in childcare or college tuition for your children. Perhaps you want to provide supplemental retirement for your spouse in addition to your funeral expenses. Once you've considered what you'd want your death benefit to help cover financially for your family, try to calculate the total amount of money it would cost to do so.

The answers to these questions may not seem clear immediately, but with a little consideration ahead of time and some guidance from one of our licensed agents, you'll be able to make an informed decision on the type of policy for life insurance that is right for you. You can also use our life insurance calculator to find out how much life insurance you need.