Variable Universal Life Insurance
Variable universal life insurance is another type of a permanent policy, but its as flexible as an acrobat. If you like to tinker and tweak things, this may be ideal. Just as the name suggests, it merges some of the most desirable features of variable and universal plans. How precisely does that shake out for you, the potential policyholder? For the cash account aspect of your policy, you have all the rewards of a variable life insurance policy that you just learned about above. You have a wide array of ways to grow your money, which puts you in control.
The features that are borrowed from the universal life model are the ability to potentially change the death benefit amount. You can also adjust the premium payments. If your cash account is soaring, you can use that money towards your monthly costssweet! Its a nice bonus, especially if funds are tight.
What Is Burial Insurance
Burial insurance usually refers to a whole life insurance policy with a death benefit of from $5,000 to $25,000. As its nickname implies, people buy this type of policy to provide money for funeral and burial costs for themselves and/or family members. It is possible to buy a policy after answering a few health-related questions on the application and with no medical exam.
Premiums are payable weekly or monthly. The premium is usually collected at the policy owner’s home or workplace, and the premium is usually a small round number, such as $2 or $3 per week the death benefit is whatever that premium will buy given the insured’s current age. For example, a $3 per week premium might buy a $6,000 death benefit for a 36-year-old man or an $18,000 death benefit for a 9-year-old boy.
Burial policies may be designed to cover one person or everyone in a family.
Under some state laws, funeral homes may be licensed to sell burial insurance, but it is mainly sold through brokers and agents of insurance companies licensed to sell life insurance.
An approach that is similar to burial life insurance is pre-payment of your funeral arrangements. Under this program, you may select the funeral home, type of service, casket , flowers, headstone, burial plot, the cost of digging and filling the grave, and other items, and lock in the prices for them by paying in advance.
Life Insurance For Babies Toddlers And Children
Life insurance is available for infants and children, but unlike traditional whole life and term policies for adults, the death benefit usually isnt the main focus. Purchasing life insurance for your child may give them guaranteed insurability in the future, which could be vital if your child should later be affected by disease or illness. Life insurance for your child can also act as an investment vehicle if it is a permanent policy. Later in life, they may be able to borrow money against the cash value component of their policy.
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Types Of Term Life Insurance Companies Explained
Gaining access to more tools and options is great for you as a consumer. When it comes to shopping for term life insurance, it can also make the process more confusing. Its not uncommon to wonder, How much life insurance do I need? or which type of term life insurance should I target?
Some life insurance companies actually sell you policies and some dont such as insurance comparison websites that collect price quotes. Identifying the differences can be confusing.
In this post, Ill help you understand the four types of life insurance companies and explain what you should know about them when youre shopping for term life insurance.
No matter where you make your purchase, remember that its important to choose a financially-solvent company.
Types Of Term Life Insurance: Renewable Term Life Insurance
Renewable term life insurance allows policyholders to extend coverage once the initial policy term ends. Most companies allow you to renew this kind of policy frequently and without taking another medical exam.
Some renewable policies automatically renew every year up to a specific age . Others will renew for your original term length once the first one ends. However, you will see annual rate increases after the renewal period. Your new rates will be based on your current age, and your rates will continue to go up with each renewal.
While renewable term life is more expensive than a level policy, renewable rates are still cheaper than increasing term life insurance quotes. Renewable policies are also much more common and easier to buy from major insurers.
So, if you anticipate growing your family in the future but want to save money on life insurance, renewable policies can extend your coverage without reducing the value of your policy.
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Get A Quote For Term Life Insurance From Aflac
At Aflac, we prioritize your life insurance needs. Our coverage is affordable, comprehensive, and fast. Term life insurance is a popular choice for those who have a specific timeline they want to plan around. To see if term life insurance is the right choice for you, talk to an Aflac agent about your options.
Still have questions?
Indexed Universal Life Insurance
This is another type of permanent life insurance with a death benefit for your beneficiaries as well as a cash account. You may see it called IUL. In this instance, the cash account earns interest based on how a stock-market index performs. For instance, the money that accrues might be linked to the S& P 500 composite price index, which follows the shifts of the 500 biggest companies in America. These policies may offer a minimum guaranteed rate of return, which can be reassuring. On the other hand, there may be a cap on how high the returns can go. A IUL insurance plan may be a good fit if you are comfortable with more risk than a fixed universal life policy, but dont want the risk of a variable universal life insurance product.
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How We Ranked The Top Life Insurers
NerdWallets life insurance ratings are based on consumer experience, complaint index scores from the National Association of Insurance Commissioners for individual life insurance, and weighted averages of financial strength ratings, which indicate a companys ability to pay future claims. Within the consumer experience category, we consider ease of communication and website transparency, which looks at the depth of policy details available online. To calculate each insurers rating, we adjusted the scores to a curved 5-point scale.
These ratings are a guide, but we encourage you to shop around and compare several insurance quotes to find the best rate for you. NerdWallet does not receive compensation for any reviews.
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National Association Of Insurance Commissioners
| NAIC Complaint Ratio 2017 | 0.05 |
*The NAIC complaint ratio is a ratio of the number of complaints a company received for the total premiums written in a calendar year. The median complaint ratio across all companies is 1. A score below 1 means the company received fewer than average complaints. A score above 1 means the company received a higher number of complaints than average.
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What Happens If You Outlive Your Policy
At the end of your policy term, the insurance carrier notifies you that the policy is no longer in effect, and you stop paying the premiums.
However, there are two exceptions:
- If your policy has a return of premium rider, you will receive a check for what you paid into the policy throughout its term.
- If your policy has a conversion rider, you may also convert your term life insurance into a permanent life insurance policy before the term coverage expires.
What Happens If You Outlive A Term Life Policy
When your initial level term period ends , you can renew the policy at a higher rate each year. You wont receive a refund for your premiums paid .
Its a good idea to get quotes for a new policy before you pay the higher renewal rate. Even though youre older and may be less healthy, you could still find a better deal in a new policy.
Some folks decide they no longer need life insurance before they reach the end of the term and stop making payments. Before you go this route, make sure you truly no longer have the need for life insurance. If you end a policy and your life circumstances change later, you could regret not having kept the policy.
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An Overview Of Options: Term Vs Permanent Life Insurance
| Type | ||
|---|---|---|
| 5, 10, 15, 20, 25, 30 years | To financially protect beneficiaries after death | |
| Permanent Life Insurance | The lifetime of the insured | To financially protect beneficiaries after death and tax-deferred cash value accumulation |
Term life insurance policies typically only provide coverage for a select period of time. With term life, if the insured passes away during the term, the insurance company pays the beneficiary a tax-free settlement known as the death benefit.
For budget-conscious people that only require coverage for a specified term, a term life policy is a good fit. For example, mortgage life insurance is intended to protect the beneficiary by providing payments if the policyholder dies before the mortgage loan is paid in full. If the loan is a 20-year loan, then taking out a 20-year term life policy makes sense.
As opposed to term life, permanent life insurance policyholders accrue a cash value. This cash value provides a tax-deferred monetary account. The cash value component of permanent life insurance can be used for estate planning, to support dependents long term, or as an income source during retirement.
The downside of permanent life insurance is that its more expensive than term, and the cash value portion makes the policy more complex due to fees, taxes, and interest. For those who can afford higher premiums and anticipate having lifelong dependents, a permanent life insurance policy can be ideal.
Return Of Premium Insurance Rider
A return of premium policy is a type of level term life insurance that pays back your rates if you outlive the policy term. This means you can receive a lump-sum payment of all of your annual rates as soon as the term expires.
Return of premium life insurance is also called refundable life insurance and may be offered as an insurance rider instead of a specific policy. For example, insurers will add a clause to your term life insurance policy and adjust your monthly rates to cover the cost of paying back your money at the end of the term.
Use this table to see the difference between return of premium and term life insurance rates:
Return of Premium vs Term Life Insurance Rates
| Coverage |
|---|
The average monthly rates are not much more expensive. For $50-$100 more per year, you could get back all the money you invested in term life insurance coverage.
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Schimri Yoyo is a financial advisor with active life and health insurance licenses in seven states. Born in Haiti. Reared in Brockton, MA. Matured in Philadelphia. Schimri is a proud graduate of Arcadia University, having earned both a Masters in Special Education and an MFA in Creative Writing from the castle-riddled campus in Glenside, PA. By personality and by profession, Schimri is an educator… |
Written bySchimri YoyoLicensed Agent & Financial Advisor |
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Benjamin Carr was a licensed insurance agent in Georgia and has two years’ experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms literally on the frontline of journalism. |
Former Licensed Life Insurance Agent |
Do You Have The Right Life Insurance Coverage In Place
Depending on your short- and long-term financial goals, it is possible that life insurance could provide you with the funds and the flexibility that youre looking for. But because there are so many different types of coverage, it is essential to work with a professional who is well-versed in how the various alternatives work and who can determine whether or not they will work for you.
If you would like more information, contact the life insurance experts at Insurance & Estates. You can reach us toll-free by calling 787-7558, or you can send us an email at . We look forward to helping you accomplish your retirement and financial protection objectives.
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What Is Group Term Life Insurance
Group term life insurance is designed to cover an entire group of people, such as workers at the same company. Employers often offer this type of term life insurance as part of an employee benefits package.
Group life insurance is relatively inexpensive compared to individual life insurance, and policyholders may also purchase supplemental coverage to fill any gaps in their policy.
If you leave your job, your policy will expire. In such a case, you would have to inquire about getting a policy through your next employer or purchasing one individually.
Types Of Life Insurance Whats Best For You
Nupur Gambhir is a content editor and licensed life, health, and disability insurance expert. She has extensive experience bringing brands to life and has built award-nominated campaigns for travel and tech. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service.
Why you can trust Insure.com
Quality Verified
At Insure.com, we are committed to providing honest and reliable information so that you can make the best financial decisions for you and your family. All of our content is written and reviewed by industry professionals and insurance experts. We maintain strict editorial independence from insurance companies to maintain our editorial integrity, so our recommendations are unbiased and are based on a comprehensive list of criteria.
Life insurance provides crucial financial protection for your loved ones after you die.
At its core, life insurance is protection a hedge against the unexpected, says Aaron Ball, senior vice president and head of insurance solutions, service, and marketing at New York Life. You are paying premiums in exchange for the promise that the insurer will be there when you need them.
While you probably understand the importance of this coverage, choosing exactly the right type of policy can be a bit more complicated.
Key Takeaways
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Modified Term Life Insurance
Modified insurance plans have premiums that change over time, usually in five- to 10-year intervals. The protection is the same, but the premiums increase.
For instance, you may dish out $12 a month for your term life policy initially. Then, in five years, premiums jump to $16 per month.
Modified insurance would appeal to someone who doesnt have much money for insurance now, but likely will in the future. For example, people with kids or a new graduate who hasnt landed their dream job yet.
Pros And Cons Of Term Life Insurance
| Advantages of Term Life Insurance | Drawbacks of Term Life Insurance |
|---|---|
| Low premium | Coverage is only in-force for a set period of time |
| Beneficiary receive the death benefit proceeds income tax free | No cash value or investment build-up |
| A good solution for “temporary” coverage needs | Must requalify at the end of the term at then-current premium rates |
| May be convertible to permanent life insurance | Not a good solution for ongoing coverage needs or business succession planning |
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Choosing The Right Type Of Life Insurance Policy
The many types of life insurance available can be overwhelming. When shopping for a policy, the first critical step is determining the ultimate goal. Another important question to ask may be for how long the insurance will be needed. If the policy is needed for a specific time, term life insurance is probably the most affordable. It might be a good idea for those who would like a lifelong financial planning tool to consider whole life insurance or one of the other types of more specialized coverages available.
How To Buy Term Life Insurance
If youve settled on term life insurance, the first step to buying a policy should be to determine the duration of coverage and the death benefit amount you want your beneficiaries to receive.
The most popular term life insurance option is the 20-year term. However, your policy term should depend on how long your dependents will need financial protection against the loss of your income. For example, you may opt for a term life policy that covers you for the duration of your mortgage.
When deciding on a life insurance coverage amount, however, the Insurance Information Institute recommends the following:
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Types Of Term Life Insurance Policies
Nupur Gambhir is a content editor and licensed life, health, and disability insurance expert. She has extensive experience bringing brands to life and has built award-nominated campaigns for travel and tech. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service.
Laura Longero is a content strategist and communications leader with more than 15 years of experience in content development in journalism, marketing and communications for start-ups to global companies. She started her career as a reporter and editor and honed her journalistic skills at the USA Today Network, working in several roles, as well as managing content and writing at MoneyGeek and XYZ Media.
Why you can trust Insure.com
Quality Verified
At Insure.com, we are committed to providing honest and reliable information so that you can make the best financial decisions for you and your family. All of our content is written and reviewed by industry professionals and insurance experts. We maintain strict editorial independence from insurance companies to maintain our editorial integrity, so our recommendations are unbiased and are based on a comprehensive list of criteria.
While term life is generally more affordable than whole life insurance, some term policies still cost more than others.
Lets dig deeper into six different types of term life plans: