What are the 3 Main Types of Life Insurance?

Whole Life/Permanent Life Insurance

Whole life insurance never expires so as long as the policyholder continues to pay the premium it will remain in effect. One benefit of whole life insurance is that it offers a guaranteed return on the cash value of the policy which allows the policyholder to borrow against the policy if needed. However, if you do not repay the loan or the amount borrowed than the death benefit is reduced by that amount. 

Term Life Insurance

Often considered the simplest type of life insurance, the only choice you have to make with this policy is what amount you want and how long you want the coverage to last. For instance, if you purchase a $1 million policy and select the term of coverage as 20 years, then your policy is effective from the date you sign till 20 years in the future which means that you could outlive your policy making it necessary to purchase additional coverage. 

Universal Life Insurance

Guaranteed universal life insurance is typically less expensive than whole life; however, it is unlikely to have any cash value, and failure to make timely payments can result in forfeiture of the policy. As long as payments are made on time, the policy does not expire and the death benefit is paid to the beneficiary. 

Selecting a life insurance policy may sound like a morbid idea, but providing financial stability to your loved one in the event of your death is imperative. With so many options for life insurance, it can be a bit confusing to know what policy is best for you. At The Insurance Outfit in Chester, NJ, our friendly and knowledgeable team of insurance professionals are happy to take as much time as needed to answer all your questions and find the perfect policy for you.