If you watched the news, then you know With the recent deaths around the world due to the Coronavirus, this is the best time to be thinking about Life insurance and the perfect time to purchase it. You don't want to be denied Life Insurance if you ever tested positive for Covid-19. It best to have these talk with family and love ones right now. If you are under the age of 50, you get life insurance for less than the price you pay for your cell phone insurance, think about it, I think your life is worth more than a phone. I know a lot of people are not educated on life insurance, below I'm going to list the different types of coverage, and you can research which ones work best for you and your family. Determine your life insurance needs.
Life insurance is primarily used to pay off any personal debts and support your dependents in the event of your death. Dependents include children, spouses, and anyone else who depends on your income. If you have no dependents, however, you may not need a term life insurance plan. There are still costs of funeral and burial to be paid, and You may also be required by a lender to purchase life insurance. Even stay-at-home parents need life insurance. If they pass away, the remaining spouse will have to pay for childcare. Decide the term or period for which you want to buy the insurance coverage. This can range from 1 year to up to 30 years. Your preferred period will depend mainly on the future needs of your dependents.
For example, if you have children, consider how many years your children will be living with you and under your immediate care. A working person with young children may want a term life insurance policy for 15 or 20 years to be protected until they grow up.
The annual renewable term has the least expensive premium but must be renewed each year at a higher rate (the older you get, the higher the mortality rate).
In contrast, any level-term policy (in which the premium stays the same each year) has a savings element like whole life that allows premiums to be fixed. The benefits of longer-term policies are the level of payments and constant insurability.
Another consideration is how many years it will be until you can use your retirement fund.
Considering that with term life insurance, if you live past the policy's length and fail to renew it, you and your family members will not receive any money back.
The different types of life insurance are:
Term life insurance.
Whole life insurance.
Universal life insurance.
Variable life insurance.
Variable universal life insurance.
Simplified issue life insurance.
Guaranteed issue life insurance.
Final expense insurance.
Term life insurance.
Because term life insurance is a pure death benefit, its primary use is to provide coverage of financial responsibilities for the insured or his or her beneficiaries. Such responsibilities may include, but are not limited to, consumer debt, dependent care, university education for dependents, funeral costs, and mortgages. Term life insurance may be chosen in favor of permanent life insurance because term insurance is usually much less expensive[1] (depending on the length of the term), even if the applicant is higher risk, such as being an everyday smoker. For example, an individual might choose to obtain a policy whose term expires near his or her retirement age based on the premise that, by the time the individual retires, he or she would have amassed sufficient funds in retirement savings to provide financial security for the claims.
Whole life insurance.
Whole life insurance, or whole of life assurance (in the Commonwealth of Nations), sometimes called "straight life" or "ordinary life," is a life insurance policy which is guaranteed to remain in force for the insured's entire lifetime, provided required premiums are paid, or to the maturity date. As a life insurance policy it represents a contract between the insured and insurer that as long as the contract terms are met, the insurer will pay the death benefit of the policy to the policy's beneficiaries when the insured dies. Because whole life policies are guaranteed to remain in force if the required premiums are paid, the premiums are typically much higher than those of term life insurance where the premium is fixed only for a limited term. Whole life premiums are fixed, based on the age of issue, and usually do not increase with age. The insured party normally pays premiums until death, except for limited pay policies which may be paid up in 10 years, 20 years, or at age 65. Whole life insurance belongs to the cash value category of life insurance.
Universal life insurance:
Universal life insurance (often shortened to UL) is a type of cash value life insurance, sold primarily in the United States. Under the terms of the policy, the excess of premium payments above the current cost of insurance is credited to the cash value of the policy, which is credited each month with interest. The policy is debited each month by a cost of insurance (COI) charge as well as any other policy charges and fees drawn from the cash value, even if no premium payment is made that month. Interest credited to the account is determined by the insurer but has a contractual minimum rate (often 2%). When an earnings rate is pegged to a financial index such as a stock, bond or other interest rate index, the policy is an "Indexed universal life" contract. Such policies offer the advantage of guaranteed level premiums throughout the insured's lifetime at a substantially lower premium cost than an equivalent whole life policy at first. The cost of insurance always increases, as is found on the cost index table (usually p. 3 of a contract). That not only allows for easy comparison of costs between carriers but also works well in irrevocable life insurance trusts (ILITs) since cash is of no consequence.
Variable life insurance.
Variable universal life insurance receives special tax advantages in the United States Internal Revenue Code. The cash value in life insurance can earn investment returns without incurring current income tax as long as it meets the definition of life insurance and the policy remains in force. The tax free investment returns could be considered to be used to pay for the costs of insurance inside the policy. See the 'Tax Benefits' section for more.
In one theory of life insurance, needs based analysis, life insurance is only needed to the extent that assets left behind by a person will not be enough to meet the income and capital needs of his or her dependents. In one form of variable universal life insurance, the cost of insurance purchased is based only on the difference between the death benefit and the cash value (defined as the net amount at risk from the perspective of the insurer). Therefore, the greater the cash value accumulation, the lesser the net amount at risk, and the less insurance that is purchased.
Variable universal life insurance
Variable universal life insurance receives special tax advantages in the United States Internal Revenue Code. The cash value in life insurance is able to earn investment returns without incurring current income tax as long as it meets the definition of life insurance and the policy remains in force. The tax-free investment returns could be considered to be used to pay for the costs of insurance inside the policy. See the 'Tax Benefits' section for more.
In one theory of life insurance, needs based analysis, life insurance is only needed to the extent that assets left behind by a person will not be enough to meet the income and capital needs of his or her dependents. In one form of variable universal life insurance, the cost of insurance purchased is based only on the difference between the death benefit and the cash value (defined as the net amount at risk from the perspective of the insurer). Therefore, the greater the cash value accumulation, the lesser the net amount at risk, and the less insurance that is purchased.
Simplified issue life insurance
"Simplified issue" means you answer a few questions about your medical history for the life insurance application, rather than undergoing a medical exam.
Guaranteed issue" means you don't have to answer any medical questions or go through a medical exam. You qualify for coverage, regardless of your health.Simplified issue and guaranteed issue life insurance make applying quick and easy. But if you are reasonably healthy, you'll get a much better rate per $1,000 of individual life insurance coverage by going through a standard application process that includes a life insurance medical exam.
Guaranteed issue life insurance
Guaranteed issue life insurance may sound like the perfect plan. You get life insurance and don't have to worry about passing a medical exam. However, let's take a walk through what you need to know so you can decide whether these types of life insurance policies are right for you.
Guaranteed issue policies have small dollar amounts
Insurance companies sell guaranteed issue policies without medical underwriting. There are limitations to those plans though. “Most of these policies have small face values, usually less than $20,000. This is because guaranteed issue policies are designed for a specific purpose, which is to pay for funeral expenses.
Final expense insurance
Final expense insurance is just a marketing term for a small whole life insurance policy that is easy to qualify for. The beneficiaries of a final expense life insurance policy can use the policy's payout for any purpose whatsoever. The death benefit is usually somewhere between $2,000 and $50,000
KEY TAKEAWAYS
The two main types of life insurance are term and whole life insurance
Some types of life insurance come with a cash value amount that works like savings or an investment account
Other policies allow you to skip the medical exam or pay for specific end-of-life expenses
Term life insurance is the simplest and most affordable option for most people