A life insurance plan is essential to financially protecting your loved ones, but plans aren't one-size-fits-all. Thankfully, there are a few different options available so that you can choose the one that best suits your circumstances. Here's a closer look at the most common options.
What Types of Life Insurance Are Available?
As the name suggests, term life insurance only covers a specific timeframe. The policies are available in increments of one to 30 years. If you pass away during the covered timespan, death benefits are paid out to your survivors. However, if you're still alive when the term is up, the plan ends and becomes void.
While you can't cash out the policy, term plans typically offer much lower rates. As such, it's an excellent choice for individuals on a tight budget. It's also useful when you only need coverage until a large loan, like a mortgage, is paid off.
Whole-life policies are a type of permanent coverage. Instead of a set timeframe, they last as long as you choose to continue the coverage—even through the rest of your life. Additionally, the premium and interest rate are fixed, so they remain the same throughout the life of the policy.
The insurance coverage also differs from term plans because it's accompanied by a cash value, which is essentially a savings account. Every month, a part of your premium payment is contributed to the savings portion of the account. Not only can you withdraw or borrow against this money, but it also accrues interest, making it an investment. For that reason, whole-life policies are a common aspect of retirement planning.
Universal plans are another type of permanent life insurance policy. Like whole-life, the coverage offers both a death benefit and a cash value. However, universal policies allow you to make changes to the plan as needed, including lowering the premium amount.
You can also utilize accrued interest to cover monthly payments, but the interest rates are variable instead of fixed. As a result, the market impacts your potential investment earnings.
Find the right life insurance for your needs with the help of Quinn Agency, LLC in Meadville, PA. Since 1992, residents across Crawford County have relied on the independent agency for a wide range of coverage options. From home and auto to life, learn more about their policy options online, and speak with an insurance agent today at (814) 337-2766.