July 28, 2023
Thanks to the seemingly endless stream of life insurance commercials that flood our airwaves and digital media, no one needs to be further reminded on the importance of having life insurance. What can be helpful, however, is to know the core differences between the various types of life insurance policies that are available, and which one is best suited for your needs based on where you’re at in life. There are a number of options to choose from, and knowing how to distinguish them can be quite advantageous when the time comes to decide.
Here’s a brief rundown on today's most popular life insurance policy options, to help you make the best decision when it comes to your budget, lifestyle, family protection needs and a host of other factors.
Term Life Insurance
One of the most popular types of life insurance policies, Term Life Insurance is very straightforward and considered to be one of the most affordable options. The policyholder chooses a payout amount, and the length of time with which they would like to be covered.
• Designed to replace lost income when the policyholder dies
• Offered in lengths that can range from one year up to 30 years
• Flexible coverage amounts ranging from five- and six figures into the millions
• Ideally purchased in lengths that would cover the policyholder’s working years
• If the policyholder outlives the term, the beneficiary does not receive payout
Whole Life Insurance
Equally popular, Whole Life Insurance plans are ideally suited for those who can afford higher monthly or annual premiums. They can last throughout the policyholder’s entire life, provided that the premiums are paid on-time and consistently, without any gaps in coverage.
• One of the most easily-managed types of life insurance polices
• Premiums never change as long as payments are made on-time
• Builds cash value over time, and offers a guaranteed rate of return
• There are no changes to the death benefit amount as you age
• Simple to manage, though it is more expensive than term-life policies
Universal Life Insurance
Universal Life is designed to evolve with the changing needs of the policyholder over the span of years or decades, and a number of policy types fall under the category of Universal Life Insurance. One of the most common characteristics, however, is the flexibility offered with regard to premiums and coverage.
• Allows the policyholder to adjust their premiums, within certain guidelines
• The policy’s cash value growth is tied to a stock market account or bond index
• The cash value component can fluctuate based on the market’s interest rates
• More affordable than Whole Life, though premiums can increase over time
• The death benefit amount and cash value growth are not guaranteed
Variable Life Insurance
With fixed premiums, a guaranteed death benefit and the potential for strong gains, Variable Life insurance policies are most often connected to an investment account (bonds, mutual funds, etc.), making them popular among investors and others with a higher tolerance for risk.
• Premiums never change, and there is a guaranteed death benefit
• The policy’s cash value is typically connected to an investment account
• There’s a higher level of risk, with the potential for significant gains
• A hands-on policy where cash value changes based on market performance
• Popular among investors and those seeking greater control of their policy
Burial Life Insurance
Burial Life insurance, or Final Expense insurance, is a scaled-down Whole Life policy that’s designed to cover the costs of a person’s funeral, burial and other common end-of-life expenses. The death benefit is guaranteed and medical exams are not always required.
• Popular among those looking to lessen the financial burden of family members
• Pays for burial, funeral, outstanding medical bills and other end-of-life expenses
• Provides a guaranteed death benefit which often ranges from $5,000 to $25,000
• Not all plans require a medical exam, ideal for seniors and pre-existing conditions
• Coverage amounts generally lower, as reflected by the lower premiums
Get Information on Buying Life Insurance in Chicago and Throughout Illinois
Despite the general similarities they share, it’s clear that not all life insurance plans are quite the same. If you’re in the Chicago area or reside in the state of Illinois, the experts at Premier Financial Insurance in Lisle can answer any questions you have about buying life insurance. There’s no obligation whatsoever, and we staff a team of licensed agents who are here and ready to help.
To learn more about choosing the right life insurance policy or get a free quote in just minutes, get in touch with Premier in Lisle today. We can be reached by phone at 800-369-0287 or via email by writing to us through our secured, confidential contact page.