Different Types of Life Insurance
Whether it’s for estate planning or to help out your family, life insurance is a crucial part of your financial plan. With a policy, you can provide your family with a lump sum that will pay off their mortgage or college tuition, as well as cover other expenses. However, it’s important to understand the different types of policies available before you decide on the best type. You may want to speak with your current agent or consult a second opinion before making any decisions.
Depending on the policy, you can pay your premiums annually, semi-annually, or monthly. Some policies offer an interest option that earns tax-deferred interest. Alternatively, you can take out a loan against your cash value. When you die, the insurance company will distribute the money to your beneficiaries.
The amount of coverage that you can obtain depends on your age and health. Some policies will require you to undergo a medical exam. If your health or age is determined to be a risk for the insurer, you’ll be asked to pay additional premiums. If you have a heart attack, for instance, the insurance company might rescind the policy and refuse to issue it. You can also be denied coverage if you make a false application.
Several companies, including Nationwide, offer multiple life insurance options. In addition, you may qualify for a multi-policy discount. You can also choose to convert a group policy to an individual policy, or purchase a separate policy. You may be required to wait a certain amount of time before the policy is issued.
Most term life policies are paid for for a specific period of time, usually 10, 20, or 30 years. If the insured person outlives the term, the coverage can be renewed. You can also opt for non-forfeiture, which allows you to buy an extended term insurance policy. You can also change your death benefit.
Permanent or whole life insurance is intended to last for the rest of your life. There are many different types of insurance, but the main purpose of each is to protect your family from loss. The main difference between a term and a permanent policy is that the premiums you pay are not subject to inflation. If you have a permanent policy, you will never have to renew the insurance.
Universal life insurance is a combination of term insurance and cash value. You can borrow from your cash value to pay for certain expenses. You can also change the amount of your premium payments, which can be beneficial.
There are several features that you can choose from, such as an interest option and a free look provision. The free look provision allows you to inspect the policy and see whether it meets your needs. If you’re not satisfied with the policy, you can return it for a full refund.
Riders are additional benefits that you can add to your policy. Some insurers will provide these benefits instantly. Other insurers might require a waiting period. You can also choose to have a suicide clause on your policy, which reduces or eliminates the amount of money payable for suicide.