There are plenty of debate topics surrounding life insurance, such as which type of life insurance is best, how to set up a policy, how to use your policy, and much more. However, most agree that having life insurance is important for (1) funding a funeral and miscellaneous death expenses and (2) covering any monetary needs the policyholder provides for their family. Yearly income and college tuition are two of the most common expenses policyholders plan to cover with life insurance.
Within the broad umbrella term of life insurance, there are two main kinds of life insurance policies: term insurance and permanent insurance. There are benefits to each of these types of life insurance policies, and we’ll look at each in more depth.
Term life insurance involves paying a premium to the insurance company for a limited amount of time. Then when you die, your family will receive a death benefit to help cover expenses. Here are some of the term life insurance benefits:
While these benefits can be useful, there are also some disadvantages to term life insurance to know about as well:
To learn more about term life insurance, read our article on How Term Life Insurance Works.
There are two main types of permanent insurance sold today. Indexed universal life insurance and whole life insurance, each with its own set of insurance advantages.
Indexed universal life insurance (IUL) is a type of universal life insurance that combines a one-year renewable term life insurance policy with a cash account that is tied to an index like the S&P 500. Here are some of the indexed universal life insurance benefits:
These benefits sound very nice, but unfortunately, there are disadvantages about IUL that can be quite sizeable:
If you want to dive deep into how IUL works, check out our recent article on How Does Indexed Universal Life Insurance Work?
Whole life insurance is the other type of permanent life insurance policy. Whole life is similar to term in that you pay a premium in order to get a death benefit, but there are some other major benefits of whole life insurance:
The cash value of your policy can then be used to finance expenses, help with your income or fund your retirement. Whole life insurance is the best way to provide for your family when you’re gone and build financial wealth while you’re alive.
Here at Life Benefits, we can help you learn how to use a participating whole life insurance policy to accumulate a high cash value, and we can teach you how to use that cash to help with retirement.
In addition to the benefits of term and permanent life insurance policies as they are, you can use life insurance riders to take advantage of even more benefits. Riders provide optional add-ons to a term or permanent life insurance policy. Here are some common life insurance riders and their benefits:
Other life insurance riders include disability income rider, waiver of premium rider, long-term care rider, guaranteed insurability rider, accidental death rider, child term rider, and more. The benefits of life insurance riders can differ depending upon each person’s circumstances.
There are many benefits of having life insurance. There are the usual benefits of helping your family after you die, but there are benefits that can help you while you’re alive as well. Schedule a strategy session with us today to discover how life insurance can help you build a financial legacy that will benefit your family for years to come.