How to Know Which Type of Life Insurance Is Best for You?

Getting insurance for life is one thing, but getting the right life insurance is another. One of the overwhelming tasks in life is making plans for the future. It’s vitally important to plan for life events like the arrival of a newborn, education, marriage, retirement, and even minor things like what to have for dinner. However, making provisions for our loved ones after we die is not the same. While there are many types of life insurance, you still need to choose the right coverage for you now and in the future.

Types of Life Insurance

There are two major types of life insurance with different operations:

1. Term life insurance

This is active for a particular length of time or until the recipient reaches a certain age. Term life insurance guarantees payment of a stated death benefit if the insured person dies during a specified term. If the term expires, the policyholder can either renew it for another term, convert the policy to permanent coverage, or allow the policy to end.

This option is less expensive than permanent life insurance.

2. Permanent life insurance

Unlike term life insurance, this lasts for the entire life of the policyholder. It features cash value. The following are different types of permanent life insurance:

  1. Whole life insurance: This provides a guaranteed cash value and death benefit. It is the most convenient kind of permanent life insurance and is suitable for anyone with a steady income due to its higher premiums.
  2. Universal life insurance: This option has an adjustable death benefit and flexible premiums. If you have enough cash value to fund it, you can skip paying premiums. This is suitable for people who want life insurance that meets their changing needs.
  3. Variable life insurance: This plan pays beneficiaries for financial loss that arises from the death of the insured. Premiums are placed in a mutual fund account, and the cash value is not guaranteed.
  4. Variable universal life insurance: This combines the elements of universal and variable life insurance. It allows you to invest premiums into sub-accounts with a guaranteed cash value. It is flexible and has similar investment features to variable life insurance. It is suitable for people who want life insurance with investment options.

One thing to remember for both major types of insurance is the contractual agreement will be broken if you do not continue paying your premiums.

Buying the right life insurance will establish your legacy and ensure that your loved ones don’t struggle with any financial burden after you are gone. Contact us at VGW  Insurance in Texas to get all of the answers you need. We look forward to helping you with all your coverage needs.