The Different Types of Permanent Life Insurance Policies

 

Financial stability has always been a priority for many of us. One great product that you can obtain to guarantee security in the future is by means of purchasing a life insurance policy. There are currently two main life insurance types namely term and permanent life insurance. Although all life insurance types feature benefits, a growing number of people are realizing the benefits of opting for permanent life insurance types instead. If you are still on term life insurance or hasn’t bought one yet, here is a quick overview of the types of insurance and the benefits and drawbacks related to them:

Types of Permanent Life Insurance Policies

The three main types of permanent life insurance products are:

  • Whole
  • Universal
  • Variable

Despite their many differences from each other, they all offer the same type of coverage that which is protection throughout your lifetimes. This is undeniably far from the short-term benefit of term life insurance which only provides protection during the specified life of the policy which can range between ten up to thirty years.

  • Whole Life Insurance

Death benefits to your named beneficiaries are guaranteed. In addition, there is rate of return on the cash value a policy accumulates through the years, making it a smart financial decision for those looking to create a good portfolio. The fixed annual life insurance payment in whole life insurance is the most expensive type of life insurance product as the policy holder carries no risk in choosing whole life insurance.

  • Universal Life Insurance

Universal life insurance may not offer the solid guarantees that a whole life insurance can deliver, but it does offer greater flexibility among policy holders. Those who opt to buy universal life insurance can either increase or decrease the benefits according to their needs or preferences as time passes. In addition, policy holders feature the ability of suspending premium payments during financial hardship and even ad more on top of standard premium payments to guarantee more benefits to their named beneficiaries.

Although universal life is less expensive than whole life insurance, the life insurance premiums are not guaranteed to remain at a level as premiums can go down as interest rates go up or can also experience frequent increases during instance when rates go down instead.

One of the major drawbacks of acquiring universal life insurance policy is that you may be forced to suspend the policy altogether due to increasing premium payments.

  • Variable Life Insurance

In this type of permanent life insurance setting, the cash value or reserves are invested in stocks, bonds, and securities through the insurance company of your choice. Its features are pretty similar to that of universal except that you are given the opportunity by your life insurance company to choose how they can grow you money from a list of investment options.

Variable life insurance gives policy holders the greatest flexibility, but also increased risk as well. If your investment decisions result in losses, policy holders will be responsible for making up by increasing their insurance payments to guarantee death benefits for named beneficiaries.