Life Cover Characteristics
Not all life insurance policies offer the same benefits for life coverage. In fact, life cover will vary widely from company to company, and from policy to policy. This is a good thing, since you are presented with multiple options and can choose one that completely fits your current situation while addressing the future needs of your beneficiary. You want to take the time to discover the life cover options available so you can make an informed choice.
The following paragraphs address the major kinds of life insurance and summarize the life cover characteristics of each.
- Whole Life – Whole life is the type of life insurance most commonly purchased. A whole life policy most often contains a cash value feature. Over time, the policy takes on a cash value, and that money can be withdrawn in the event of an emergency. A whole life policy therefore is a combination insurance policy and savings account. It is not a particularly good investment as far as savings is concerned, but most customers do not purchase a whole life policy for that purpose.
- Term Life – Term life insurance is the most popular type of life insurance when the cost of premiums is the primary issue. Term life is somewhat of a misnomer since the policy terminates after a number of years, usually when the policyholder reaches 65, rather than at death. This type of policy may be ideal for those who have managed to accumulate so much wealth that life cover is no longer needed, and in addition, insurance premiums are removed from the budget at or near retirement. When the policyholder reaches 65, the policy simply ends, there are no longer premiums to be paid and the benefits cease. Term insurance policies do not have a cash value feature.
- Guaranteed Life – Guaranteed life insurance is life insurance that is provided regardless of the health status of the person purchasing the policy. This type of insurance is occasionally the only option available to some. The benefits are generally slightly smaller than other kinds of life insurance, and the premiums can be up to 5 times higher. Also, if you miss a payment on a premium, the company is more likely to cancel your policy. A guaranteed life policy can be risky, and can be a poor choice from a strictly financial perspective.
Your choices, in summary, are: having a whole life policy that remains in force until your death, while building a cash reserve: a term insurance policy, where both premiums and benefits cease when you reach 65: or the comparatively expensive guaranteed policy which features lower benefits and high premiums.
We can help you make the choice that best fits your situation. There are many sub-options within the types of insurance described above. We’ll be happy to give you a free quote, provide additional information and answer any questions you might have. Just click on our “Get a Quote” button, and let’s get started.