If you are preparing to take out a life insurance policy, it’s important to understand the different services that various providers offer. While there are certain types of life insurance which every provider will make available, you can expect certain differences company to company. Because life insurance isn’t about your personal needs, but the needs of a recipient for whom you care a great deal, it’s important to choose the right provider. We’ll talk about different insurance options, as well as the different ways in which they might be provided from competing life insurance companies.
We all know what life insurance is, basically. It’s a policy that gives money to family, dependents, and/or loved ones when you die. It might cover your funeral costs or provide replacement income to a spouse or child, if you were the primary or secondary breadwinner in that person’s life. You don’t have to be old to find yourself in need of life insurance (and you’ll save money if you start buying it early) so here are some choices, as well as what to look for in a good life insurance provider.
Two Basic Life Insurance Types
Life insurance generally falls into two categories: term life insurance and universal life insurance. We won’t go into the details here, but it’s important to know the general characteristics and differences. These two main categories will be available through any insurance company, but the various subtypes (not covered here) will not necessarily be provided by everyone.
Term life insurance lasts for a particular period of time. Sometimes it’s renewed yearly; other times it provides coverage for a specific period measured in years (5, 10, 20, 30, etc.). The coverage is effective as long as you pay the required premium payments. Term life insurance is generally the more affordable option of the two.
Universal life insurance is a little different. It can cover the policyholder for life, no matter how long that life is, as long as the premium is paid. During this time, the policyholder pays higher premiums than with term life insurance, but this extra money is not spent for nothing. Not only does universal life provide death benefit coverage even if you live to be 100, it also has the ability to build cash value, which earns interest.
What to Look for In a Life Insurance Provider
Now that you understand the basic two kinds of life insurance, you’ll probably want to dig a little deeper to understand the subforms of each type. We won’t cover every nuanced policy here, but you should if you don’t feel that the basic life insurance types meet your needs exactly. A good life insurance provider will be helpful in this regard.
First, a great life insurance agent will answer all of your questions, so you understand exactly how your life insurance policy works. Because this policy will affect the lives of people you care about, even after you are gone, it’s important to take the time it takes to find an agent who can make you feel comfortable, and educate you about the policy that meets your unique needs best.
Strong life insurance providers also offer a variety of options. While to a casual observer, the basic two kinds of life insurance may seem good enough for just about everyone, each individual situation has individualized needs which may require a specialized policy. A good provider will offer sufficient options to give you flexibility in crafting the perfect plan for you and your policy’s eventual recipients.