Whole life insurance is the most prominent of the insurance products on the market and the oldest. Whole life literally means whole life. Term life is simply a life insurance policy that will last for a specific amount of time, i.e. 5 years, 10 years etc. After that date, the policy will expire. Universal life is what is called a participating policy with many extra provisions included such as: earning interest on the cash value accumulated, ability to change premium payment schedules ,and many other features for the owner.
Term Life Insurance
For the many who are just beginning their working years, buying a home, or starting a family, term insurance would be a great choice. This product is much more affordable for higher amounts of coverage. This would mean that you can purchase enough to cover the payoff of a current mortgage and preferably enough for the surviving spouse to live on until they are able to join the working force once again. Decreasing term would be another great idea. This could follow your mortgage year by year until the home is paid off. If that inevitable event happens before that time, the policy would have enough coverage in it to cover the existing payoff of the family home. The down side to term life insurance is that it does not build any cash value as you pay your premiums. This means no built in savings account.
Whole Life Insurance
Whole life is a product that has been around for more than 100 years. Whole life covers the policy holder for their whole life as long as premiums are made. The only true advantage to this plan is that you are covered for life and the cash value savings account built inside. The cash value is a portion of the premium payments made into the policy. This account can be cashed in or borrowed against. Of course borrowing against will lower the face amount by the borrowed amount, plus any and all interest until payed back. Never borrow unless it is an emegerncy. Whole life insurance should be purchased to pay for all final expenses. Funerals are not getting any cheaper, the average cost across America is nearly 7000 dollars. Of course the older an individual is, the more they will pay per 1000 of coverage. When individuals reach retirement, this should be looked into, and this should be the only life insurance you carry.
Universal Life
Eventually, younger consumers became wise to how much they were paying over their life for whole life protection. Companies turned to Universal life as the answer. Universal life has many unique qualities that the policyowner can take advantage of. Some earn a decent interest rate in the cash value account. Some are allowed to set their own payment schedule and even skip payments from time to time without penalty. Universal life would be an alternative for the younger generation just starting out. For the price of premium, universal life has the bang for the buck. In this day and age, saving money is important! So is saving the family homestead.
Life insurance is not just something our grandparents used to purchase. Life insurance is protection for our families. It is true that we do not know when that day will come for us, but we do know that day will come. It will always be a shock, it will always bring sadness, but with the right coverage, it will not be the end to your families way of life.
