How many of us think about death? How many of us think Okay, I am gonna do the responsible thing and make sure all the expenses are covered after I am gone. Most people tend to bury their heads in the sand when the conversation of death comes up, and I will admit that in the past, that was me. But after losing my sister last year and seeing firsthand the amount of money that was spent on her funeral I knew that I didn’t want my girls to have to pay out the money. So, hubby and I started looking more into life insurance. Did you know there is more than one kind of life insurance? There are accidental, term, and regular. After researching for a few weeks and letting my head take a break because my brain was swirling with all the information- I decided that if I was struggling with all the kinds of life insurance, surely other people must be struggling too. So that is why we are thinking ahead about the end of life insurance.
Term Life Insurance:
Term life insurance provides coverage for a specific period (the “term”), typically ranging from 10 to 30 years. This type of coverage is an excellent option for those seeking affordable protection and aims to provide financial support in the event of premature death within the term.
– Affordable premiums: Term life insurance generally offers lower premiums compared to permanent policies.
– Flexibility: Policyholders can choose the length of the term based on their individual needs.
– Simplicity: Term policies tend to be easier to understand, with straightforward coverage and no investment component.
– No cash value: Unlike permanent policies, term does not accumulate cash value over time.
– Limited coverage duration: Once the term expires, policyholders might need to reapply for coverage at a higher premium if they still require protection.
Whole Life Insurance:
Whole life insurance provides lifelong protection and features both an insurance component and an investment or savings component. Premiums remain constant throughout the policyholder’s lifetime, making it ideal for those seeking long-term financial security.
One other important reason to own a form of whole life insurance is to address your funeral and final expenses. Matt Schmidt with Burial Insurance Pro’s shares the following: “For many people, owning a whole life insurance policy to address your burial costs and end-of-life expenses is a wise decision. We often see expenses ranging from $5,000 to $25,000 to address funeral costs, cremation expenses, and other types of memorials on average. Owning what’s referred to as a burial insurance policy, which is a small amount of whole-life coverage, is a great way to address these concerns. Many well-known providers such as Gerber Life, Senior Life, and Mutual of Omaha provide burial policies at affordable rates.”
– Lifetime coverage: As long as premiums are paid, it provides coverage until death.
– Cash value accumulation: These policies have a savings component that accumulates cash value over time and can potentially be accessed via loans or withdrawals.
– Dividend payments (with participating whole-life policies): Some companies offer dividends to policyholders.
– Higher premiums: Whole life insurance typically has higher monthly premiums compared to term life insurance.
– Complexities: The investment component of whole-life policies can create complexity and additional cost.
Universal Life Insurance:
It is a flexible policy that combines lifetime coverage with the potential for building cash value. It offers policyholders control over their premium payments and death benefit amounts.
– Flexibility in premiums: Policyholders have the option to adjust their premium payments within certain limits.
– Cash value growth: Universal life policies accumulate cash value over time, which may be used for loans or withdrawals.
– Adjustable death benefit: Policyholders can increase or decrease the death benefit amount according to their changing needs.
– Complexity: Managing universal policies can be more complex than term or whole-life policies.
– Variable premiums and death benefits: Depending on the policy’s performance, premiums and death benefits may vary from year to year.
When considering all of the options, finding affordable coverage is essential. Term remains a popular choice due to its straightforward nature, lower costs, and customizable terms. However, whole life and universal life insurance provide long-term coverage with additional savings potential.
Ultimately, selecting the right type of cheap term life insurance or exploring other options will depend on your unique circumstances and financial goals. It’s important to evaluate your needs thoroughly and consider seeking advice from a qualified insurance professional who can guide you toward the most suitable policy for your situation. Remember – prioritizing affordability does not mean compromising on the importance of protecting your loved ones financially in times of need.