Types of Life Insurance Policies

Term Life Insurance

This is the cheapest type of life insurance. This type of life insurance is like “borrowing” the insurance policy. You pay for a certain amount of years, and then when the contract expires, then you have no more insurance. The downside to this, is that when it expires, and you want to keep the insurance, you are now older, and the insurance will be more expensive, if your health allows you to purchase it.

Whole Life Insurance

This type of insurance remains with you for the rest of your life. It is more expensive than term, but it never expires. Also, it builds cash value, but if you borrow against it, you lose that amount in death benefit.

Index Universal Life Insurance (IUL)

Builds cash value, reflective among the stock market. Never goes below a certain amount of death benefit. Usually grows about 4% a year. Combines the best of both world of the life insurance, and investing! You have a minimum you need to put in, and then you can put more in at a time as you choose to do so.

Return of Premium

Similar to Term, with the exception in that you get ALL of your money back that you paid into it if you do not pass away. This is great for people who have family expenses, and as they get older, looking to have money just for a burial. Can not cash out until the end of the contract.

Single Premium

You pay one time a large lump sum of money, and then you are given more death benefit than what you paid into it. For example, if you are looking for $35,000 death benefit, you can put $30,000 down, and it will become worth $35,000

Final Expense

A whole life policy, geared towards older folks, usually a little more expensive, but only up to $35,000 at most. Really just to use to cover funeral expenses.

What to Look for with These Policies

• Do the premiums increase every few years?
• When does it expire?
• What riders (kids, payments after expiration) are available? Are they free?
• What are the health questions?
• Is the company reliable?
• Does this policy cover the expenses you are looking to cover?
• Does it fit within your budget?
• Is there a waiting period for it to go into effect?