November 28, 2023

Life Insurance: Benefits and Types of Coverage Available

Life insurance is one of the key types of insurance that everyone should consider purchasing. It's designed to provide a benefit to your surviving family (or other beneficiaries) when you die and can also provide you with financial benefits while you're still alive. There are multiple types of life insurance and different ways you can set up and use your policy. Understanding and exploring the options will help you select a life insurance policy that meets your needs and allows you to work toward certain financial goals.

What Type of Life Insurance Policies Exist?

Choosing the right type of life insurance is one of the most important things you can do if you want life insurance to work for you. Life insurance types can be based on how long they cover you for, how you can use them, and more. Some of the most common types of life insurance include whole, term, and universal life insurance.

Whole life insurance

As the name suggests, whole life insurance is designed to provide cover for your whole life. The policy doesn't end unless you cancel it, which means there's no need to remember to renew it. Whenever you pass away, your whole life insurance policy will still cover you, as long as you have kept up with your premium payments.

Whole life insurance offers other benefits too. One of the main benefits of a whole life insurance policy is that it has a cash value. This means that you can use your policy to generate returns on your investment or effectively borrow money from yourself.

Term life insurance

Term life insurance is a non-permanent form of life insurance. The policy lasts for a set term, after which it can often be renewed. Some policies might renew annually, while others might be designed to last for a term of five, 10 or 20 years, or even longer. One of the top benefits of choosing a term life insurance policy is that the premiums are generally cheaper compared to whole life insurance. This makes term life insurance an attractive option for anyone who wants to save money or for anyone who might be hesitant about committing to a whole life insurance policy.

Term life insurance can also often be converted into term life insurance. This provides an extra level of flexibility as your financial circumstances and goals change.

Universal life insurance

Universal life insurance is a type of permanent life insurance. It's a flexible option that can offer different options for premiums and benefits. Like whole life insurance, it often has a cash value but it can also be cheaper than whole life insurance. With universal life insurance, you benefit from the ability to adjust your premium payment amounts and you may be able to grow a larger cash value with this type of policy too.

How Can Life Insurance Assist Me or My Beneficiaries?

Life insurance gives you a number of advantages when you're planning your finances. It can benefit you while you're still here and it can provide financial help to your beneficiaries after you have gone.

One of the primary benefits for you is simply the peace of mind that you gain, knowing that your family or other loved ones will be taken care of financially if anything ever happens to you. The death benefit paid out from a life insurance policy can help ease the financial burden that might be caused by the loss of your income, funeral expenses, and other costs. 

As long as you keep up your premium payments and your life insurance policy is still active, your beneficiaries should receive a payout. They can use the money for many different things, from daily living expenses to future medical bills, tuition, and much more.

When your life insurance has cash value, it can also provide you with financial benefits while you are alive. When your policy has a cash value, it means that it earns interest over time and taxes are deferred on the interest. You can borrow against the value of the policy and withdrawing cash is also possible, although the latter reduces the death benefit available. Life insurance with cash value (such as in cases of whole life insurance and universal life insurance) typically has higher premiums, but comes with additional benefits.

How Do I Get a Life Insurance Policy?

To take out a life insurance policy, you can use an insurance broker or approach an insurance provider directly. You should spend some time researching which options might be best for you and will match your financial needs and goals. Think about the main reasons you want to take out a life insurance policy. It's most important if you have people who are dependent on you, such as children or elderly parents. But a life insurance policy can still be beneficial to you even if you don't have any financial dependents. It can benefit your loved ones after you pass and you can use it as part of your financial strategy now.

There are several factors to keep in mind when researching which life insurance policies could work for you. Firstly, you might want to consider your budget and how much you're willing to pay each month. You should also consider whether you want the convenience of being covered for life or if a term life insurance can provide what you need. You might consider term life insurance if you feel it's more important to be covered during your working life, while your children are young or when you're in a certain career, for example.

When you're looking for an insurance provider, you should focus on finding one that matches the needs of you and your family. An independent insurance company like Alpine Castle Lake Insurance can offer you more carriers, more options, and better rates to make finding the right insurance policy easier than ever.

Contact us at Alpine Castle Lake Insurance to find out more about life insurance and which policy is right for you and your financial goals. Our insurance experts will help you find a policy that fits your needs.