When you are searching for the best life insurance policy for you, one of the most important considerations is the type of insurance you are purchasing. While the differences between these policies are not always explained very well, they offer different coverage, different premiums, and different exclusions and so should influence what you purchase. Life insurance falls into four main categories though it can often look like there are more because different companies will title them differently. Getting familiar with each type will help you know what sort of policy you are looking for and which one will be the best life insurance policy for you.
What you will get if you select the term life insurance:
Term insurance will pay your beneficiaries a certain, specified amount of money in case of your death in exchange for a regular premium. These policies generally have a specified length of coverage, or term, after which they are no longer valid. Most of these policies pay-out in case of death only and not if you contract a serious illness or are in an accident that seriously prevents you from returning to active work. Term life can be the best insurance policy or the cash value life insurance for you if you are looking for the lowest personal investment or premium. On the other hand, if you do not die during the specified term of coverage, you receive nothing in spite of your investment.
Benefits of choosing whole life insurance:
Whole life does not have a fixed term of coverage and so is considered permanent insurance. In addition, this type of insurance policy has a cash value on top of the specified death benefit, and you can access that cash value at any time. However, anytime you use money from the cash value of your policy, it is considered a loan and your beneficiaries may not receive the entire death benefit if you die before paying it back. While whole insurance policies usually have significantly higher premiums than term life policies, the greater flexibility and permanence of the insurance can outweigh this downside.
Choosing universal life insurance may be beneficial for you:
Universal life offers some similar benefits but more flexibility than whole life insurance. Most universal policies offer flexible premiums and distinguish between what you are paying for the death benefit and cash value of the best life insurance policy. If you want the benefits of life but know you cannot afford the premiums at this point, a universal policy can allow you to have a permanent insurance policy with some cash value and lower premiums.