Types of Life Insurance
Also known as burial insurance or end-of-life insurance, a Final Expense Plan is an insurance policy that helps cover medical bills and funeral expenses facing a family after a loved one’s death. These options cost less than traditional insurance, and can be an affordable option for people on a fixed budget — such as seniors who want to plan for their end-of-life expenses. Most importantly, a Final Expense plan enables a client’s loved ones to handle funeral costs, medical bills, and any other financial obligations during a highly emotional time.
Term Life Insurance provides a cheaper premium to get the most death benefit making it an excellent choice for most people. Term life insurance covers the policyholder for a specific amount of time, known as the term. The term lengths vary according to what the individual chooses. Term insurance options typically are offered in 10, 15, 20, 25, and 30 year terms, and premiums are level during the term period. Some carriers offer Annual Renewable Term coverage for one year at a time with premiums increasing each year.
A Whole Life Insurance policy provides lifelong protection and includes “cash value” which grows steadily throughout the life of the policy. The death benefit of a Whole Life policy is typically paid to the beneficiaries tax-free and the cash value grows tax deferred. If structured properly, a policyholder can take a tax-free loan against the cash value in their policy. This loan and interest will reduce the death benefit, if not repaid prior to death. The client can repay the loan at their discretion. Some policies allow the client to “withdraw” a portion of the cash value as well.