Which Type of Life Insurance Policy is Right for Me?

Final Expense Life Insurance

Life insurance isn’t just for those who are young and at the peak of their health. There are certain life insurance policies, that allow you to obtain coverage without completing a medical exam or answering a long health questionnaire. If you meet the age requirement (50 to 85 years old).

You can also choose how much coverage you need. Similar to a traditional whole life insurance policy, Final Expense whole life insurance offers a locked-in rate that won’t increase as you age or if your health status changes. Each time you make a payment, your policy will grow in cash value.

Final Expense Whole Life Insurance also offers living benefits to those suffering from certain chronic or terminal illnesses, based on the terms outlined in your policy, at no additional cost.

It’s an attractive policy for those who meet the age requirement and want to help ensure their loved ones won’t have to shoulder the financial responsibility of medical bills, credit card debt, or funeral costs alone.

Whole Life Insurance

A more permanent option, whole life insurance is designed to provide you with coverage for exactly that — your whole life (as long as premiums are paid). Whole life insurance also allows you to lock-in your premium rate, which means it won’t increase as you age, or your health status changes. Let’s say you purchase a whole life insurance policy during your working years, for example. You’ll pay the same rate when you retire as you did when you bought it, which is typically less expensive than it would have been if you waited to buy it later in life.

Whole life insurance policies are typically more expensive than term life insurance policies, however. The reason for that price difference is their permanency, as well as their “cash value.” Cash value is accessible money potentially set aside each time you make a payment. You can leave the funds untouched and watch them grow or borrow against the cash value of your policy to cover an emergency. Maybe your car needs a repair, or you need dental work done. The money can be used however you’d like, but you do have to pay it back with interest, in order to maintain the full value (“death benefit”) of your policy. Cash value is also tax deferred, like an IRA or a 401(k).

Who needs a whole life insurance policy?

Anyone who wants guaranteed coverage for the rest of his or her life — at a consistent rate that can be budgeted for each month. The sooner you buy it, the better though, as premium rates tend to be lower when you’re young and healthy.

Whole Life Insurance – Explained in 30 Seconds:

Coverage that can last up to a lifetime

The amount you pay (“premium”) is locked in for life

Cash value that grows with each payment you make, like a nest egg for the future

Could be valuable for those who want coverage for life — at a locked-in rate that you can count on

Universal Life Insurance

Similar to whole life insurance, universal life insurance offers coverage for up to a lifetime, or permanent life insurance, as long as premiums are paid. It also offers cash value, which can be borrowed against should the need arise.

What’s the difference between universal life insurance and whole life insurance?

The ability to adjust the benefit amount to meet your current needs — subject to approval by the life insurance provider — without having to buy an entirely different policy. So, if you like flexibility, it can be beneficial.

A universal life insurance policy can be ideal for those who are young and just starting out. It’s one of the most affordable ways to secure up to a lifetime of coverage. If your financial situation changes, you also have the ability to change your life insurance coverage along with it (within the limits outlined in your policy).

Universal Life Insurance – Explained in 30 Seconds

Flexibility to adjust the benefit amount (subject to approval by the life insurance provider)

A tax-free way to help financially protect your loved ones

Cash value that grows with each payment you make, like a nest egg for the future

Could be valuable for those whose coverage needs may change over time

Term Life Insurance

One of the most affordable options, term life insurance is ideal for those looking for greater coverage (the monetary value of your policy) for a set period of time. Many terms last for 10 to 30 years, depending on which option you select. Once your term ends, so does your coverage.

Term life insurance may be beneficial for those who have greater coverage needs now that may diminish over time. Maybe your family is growing in size — and you’re doubling up on coffee to keep up with them. You might need greater coverage from their first steps to the day they walk across the stage to accept their diplomas.

When your “term” ends, you may have the option to renew your term life policy or choose a more permanent option for coverage, such as whole life insurance.

A timer showing you can choose Term Life Insurance for 30 years especially if your family is still growing.

Term Life Insurance Explained in 30 Seconds:

One of the most affordable types of life insurance

Choose from 10-30 years of life insurance coverage

Could be valuable for those who have a greater need for coverage for a specific period of time (e.g. while your family is still growing)