Are you thinking of taking out some life insurance or switching up your policies? It could be a smart and cost-effective way to protect your loved ones when the unthinkable happens.
Here’s more about the types of life insurance policies out there, as shared by Medical Profiles.
Term Life Insurance: There’s an End Date
Life insurance for a set term is the standard option. You’ll pay a monthly premium for a specific death benefit. If you die while your policy is active, your chosen beneficiaries will receive this stated payout.
While the typical term length for term insurance is 20 years, policies over 5, 10, and 30 years are also available. It’s a popular arrangement for its simplicity and relative affordability, particularly if you start it when you are young and healthy to lock in a low monthly premium.
Once the insurance’s term expires, most companies will give you the option to renew the policy on a year-to-year basis. At that point, your monthly premiums might go up.
Pros
- Set monthly premiums
- Higher coverage limits
- Option to renew
Cons
- Policy expires
- Only a death payout
Whole Life Insurance: Pay and You’re Covered
Whole life insurance or permanent life insurance provides coverage for your lifetime, but only if you continue paying the premiums. Examples of whole life insurance include indexed universal life insurance and variable universal life insurance.
Whole life insurance has a cash value component, which accrues interest. You might be able to access this cash. For example, some people use it as an investment vehicle, college tuition, or a retirement nest egg.
When you, as the policyholder, die, the cash portion goes to the beneficiaries on top of the policy’s benefits. You can even take out tax-free loans against the cash value of the whole life policy.
Pros
- Coverage doesn’t expire unless you stop paying the premiums
- Cash component accrues value according to the interest rate
- Cash value component aids financial planning and investments
Cons
- Premiums are more expensive and may increase
- Death benefit may go toward unsettled debts if you used the policy as collateral (your beneficiaries won’t get the full amount)
Other Types of Life Insurance
The life insurance types above are only two of many options you may want to explore. Think about what you need, what you can afford, and where you’re at in life before committing to a policy.
Simplified Life Insurance
Traditional types of life insurance policies require a medical exam to determine your coverage risk. If you are in poor health, the insurer may decline your policy application.
In that case, simplified life insurance would be another option that does not require taking a paramedical exam. You may still have to fill out a family medical history questionnaire. However, it’s a great option if insurance companies tend to judge you as a high-risk case and block your access to more traditional policies.
Pros
- No paramedical exam
- Term and permanent policies available
Cons
- More expensive premiums
- Lower death benefits
Less Mainstream Life Insurance Options
Lesser known life insurance policies you might also consider include the following:
- Guaranteed life insurance: Guarantees coverage without a medical exam or a health questionnaire.
- Credit life insurance: Pays off outstanding debts and lenders if you die.
- Final expense life insurance: Covers funeral costs or end-of-life expenses.
- Joint life insurance: Covers two people instead of just one.
Your insurance provider may also suggest add-ons or riders to fill any gaps in your coverage.
Paramedic Exams for Life Insurance
Would you like to discuss how to schedule convenient in-person exams for your policies? Contact Medical Profiles at (832) 251-3926 today!
