Life Insurance Longview WA | Longview Life Insurance .com

When you start shopping for life insurance you will quickly discover that there are two main policy types. These are Universal, sometimes referred to as Whole or Permanent life insurance, and Term. There are some key differences between them, and each has pros and cons. Understanding these two policy types will make it easier to select the one that's right for you.

Universal Life Policies

These are also presented as whole or permanent life insurance policies. This type of life insurance covers you as long as you live, or until you hit a predetermined age-usually around 99 years-in which case the policy will pay out. In most cases, this policy will last until your death. This type of policy is more expensive because the company expects that they will definitely pay out on it at some point, since it does not expire. As long as you continue to pay your premiums, this policy remains in force no matter what happens regarding your health.

A Universal policy also has the feature of a cash accumulation account, which allows you to save money in a tax-deferred account on which you will earn interest. This account allows you to withdraw funds either as a loan or as a surrender. When the policy pays out, all funds in the accumulation account will be paid to the beneficiaries as well.

Term Life Policies

A term life policy mainly differs from a Universal policy in that it expires. This type of policy is in force for a set number of years, and then the coverage ends. Because the company has a lower risk of paying out on this type of policy, the premiums are generally more affordable, allowing you to take out a higher amount of coverage. Common terms for these policies are 10, 20, and 30 years, although different companies may offer numbers in between. The longer the term, the higher the premium is likely to be due to the higher risk of death occurring during that time period.

Term policies do not offer cash accumulation accounts. At the end of the term, the premiums you have paid do not come back to you in any way. If you want to take out a new term policy after the term ends, your age and any changes in your health may result in a higher premium or even a denial.

 

Both of these types of life insurance have their place and are useful in different situations. The best type of policy for you depends on how much coverage you need, how long you need the coverage, and what you can afford to pay for your premiums. In many cases, a combination of two policies, one from each type, offers the best coverage.

 

The number and different types of life insurance policies available on the market can be overwhelming and confusing to choose from, especially if you have never purchased a life insurance policy before. Understanding what types of policies are available to you and what they can offer, even before beginning the search, can make it easier and less time consuming. Here is some basic information about the types of life insurance policies that you can purchase, and how to select the one that is right for you.

Types Of Policies

There are two general categories of life insurance policies: temporary and permanent. They both include coverage in the form of a payout to your chosen beneficiary in the event of your death, but the additional benefits these policies can offer you differ, namely from their investment possibilities to providing coverage for an inexpensive premium.

Temporary Life Insurance

The most common type of temporary life insurance policy is more commonly known as term life insurance. This type of insurance offers you death benefit protection for the term of the policy, typically 10 or 25 years. At the time the term expires, so does the policy, though many offer renewal options at an increased premium. The benefit of term life insurance is that it offers maximum payout for the lowest premiums. This is especially true the younger you are.

Permanent Life Insurance

Whereas there is really only one type of temporary insurance policy, there are a number of different options in the permanent life insurance market.

Whole Life Coverage-This includes guaranteed death benefits, guaranteed cash values, and the security of a fixed annual premium.

Universal Life Coverage-This option provides you with greater flexibility in both premiums and potential return. It still offers both a payout in the form of life insurance coverage and the potential of a cash value to increase with the term of the policy.

Limited Pay-This is basically permanent and term life insurance combined in that you only pay premiums for a specific term; however, you still receive the death benefit after the term expires, though usually at a reduced rate.

 

Endowment-This type of policy, which is similar to annuities, acts more as an investment than does traditional life insurance. The principal is protected and a payout is guaranteed, but the premiums are much higher than those of other types of life insurance.

Figuring out how much life insurance you need to carry can be confusing. It really depends on a few factors, and there are a few simple methods you can use to determine how much you should carry. At the most basic, there is a minimum amount of life insurance you should carry if you want those left behind to avoid a struggle. Beyond that, you really can't have too much insurance, so add more as you can afford it. But remember, the younger you are when you take out your policy, the more affordable it will be.

Who Will Be Left Behind?

Who will be left behind when you pass away is one of the biggest considerations as to how much life insurance you need. If you are married but have no children, and your spouse has a good source of income, you might not need as much insurance as someone who is the main breadwinner. Each child you add to the mix means more insurance you will need to ensure they are cared for if you are gone. You also need to consider whether you want to provide for college educations for your children or if you are simply aiming to meet their basic needs.

Your Annual Income

How much you make every year is a good starting point to determine how much your family will actually need to survive without you. If you are the sold earner in the family, then you know that your income is enough to keep the family at the current lifestyle they are used to. Many agents recommend that you provide at least 5 times your annual income in life insurance, which provides your family with approximately 5 years of income to recover and find a new source of funds.

Mortgage Protection Coverage

Will your family be able to pay the mortgage on your home after you are gone? If you don't want them to lose their home, providing enough life insurance to pay off the mortgage is a good idea. This is often recommended on top of the annual income you will provide to your family.

Life Insurance Calculators

There are a number of excellent life insurance calculators available online, and your insurance agent can also provide this service. With a small amount of information regarding your finances and income, these calculators make it easy to determine just how much insurance you should take out. Remember that while life insurance may seem like an unnecessary expense, your family's future may depend on it. Make sure you have enough so that you will be prepared for an unexpected tragedy.