Life Insurance Types and Options
- Term Life
- Whole Life
- Guarantee Universal Life
All these offers a death benefit, however they may vary considerably in duration of coverage, premium overall flexibility, build up and distribution of cash values, as well as other factors. Although certain policies differ by company\, all these basic descriptions will help you understand the fundamental distinctions.
Term Life Insurance
Term life insurance is basic protection that commonly will not build life insurance policy cash value . Customers generally purchase term life insurance to supply death benefit security for a certain time period.
Rates for term coverage are almost always initially less than other forms of life insurance simply because the policy just provides a death benefit for a specified period. Later on, some term insurance policies maybe lengthened or modified into another kind of coverage .
Nonetheless, should you renew or change your coverage, your new premium could possibly be more than your prior coverage, that will continuously increase as you grow older.
Whole Life Insurance
As its label signifies, whole life insurance offers a life-time death benefit for a fixed premium amount and also builds cash value you can utilize while you’re living.
The leverage of a whole life insurance policy is the fact that it gives you guaranteed cash values and benefits in exchange for fixed premiums. A trade-off to think about is that a whole life policy can build cash value at a reduced rate compared to alternative coverage options.
Guarantee Universal Life Insurance
Guarantee Universal life ( GUL ) insurance policies offer a death benefit in addition to the chance to build policy cash value. This insurance coverage differs from term and whole life insurance simply because, within policy limits, it is possible to vary the amount and timing of your rates. Usually, you may also raise or reduce your death benefit (depending on your insurability). So long as you sustain adequate policy value to keep your coverage in-force, your policy’s flexibleness allows you to pay premiums as your conditions permit.
Your cash value in a GUL plan is dependent upon the amount of premiums you have to pay, the declared interest crediting fix by the insurance carrier, and policy expenses.
As a policy owner , you will have a lot more flexibility with GUL compared to with whole life, however you incur additional risk. GUL policies will often have less guarantees than whole life coverage, so you should cautiously handle premium payments and any distributions taken to help ensure that your plan will remain in-force. This kind of life insurance policy typically provides a built in no lapse guarantee that may last for the life time of the insured life or for a shorter time chosen by the policy owner.