Life Insurance Greenville provides a financial safety net for loved ones. It can help cover funeral expenses, debt repayment, and long-term financial goals.
There are many different types of life insurance policies. Each may have its bells and whistles.
Be sure to review your beneficiary list regularly. Births, deaths, remarriages, and divorces can change the list.
Term Life Insurance
Term life insurance is designed to provide protection for a specific period of time. It pays a death benefit to your beneficiaries if you die during the policy’s term, which can be anywhere from one year to 30 years.
It’s an affordable way to protect your family against financial loss when you die. Depending on your needs, you can use the death benefit to pay off debts or expenses, such as funeral costs, final bills, and estate management fees. If you’re single and in your 20s, you can use the death benefit to cover outstanding student loans or car payments. If you’re married and have children, a term policy can help your spouse maintain the household’s current lifestyle or cover child-related expenses.
Unlike whole life insurance, term policies don’t build cash value and you won’t be able to borrow against them or withdraw any of the savings. But, most have a return-of-premium option that allows you to receive all or a portion of your premiums back at the end of the policy’s term.
When choosing a term life policy, consider the length of the coverage period, the death benefit and any riders that are available. The type of policy you select will also depend on your budget and risk level. Most life insurance policies require a medical exam to evaluate your health, and certain hobbies or dangerous occupations can raise your rates.
If you don’t renew the policy by its expiration date, the policy will lapse and your beneficiaries won’t receive the death benefit. You can typically reinstate a lapsed policy within a short grace period by paying the past-due premium and interest.
Buying life insurance is an important decision, and it’s critical to research companies before making a purchase. Check the insurer’s AM Best financial strength rating, customer satisfaction ratings and complaint histories. Also, look for life insurance providers with flexible products that allow you to customize your plan to fit your unique situation. This includes options for both term and permanent policies, and some offer the flexibility of no-lapse guarantees or adjustable premiums that let you change your payment amount to match your income.
Whole Life Insurance
Whole life insurance is one of the most popular forms of permanent life insurance coverage. It pays out a death benefit, offers tax benefits to your beneficiaries, builds cash value, and can be customized with riders that add features like chronic illness protection and savings options. It also has fixed premiums that last for your entire lifetime, and you may even receive dividends that can be used to make additional premium payments or purchase additional coverage.
In 2020, 59% of individual life insurance policies purchased were whole policies, according to the American Council of Life Insurers. Whole life insurance can offer financial security for your family and friends in the event of your death, and it can also provide you with an investment vehicle and a means to supplement your retirement savings plan.
A key benefit of whole life insurance is that it gives your loved ones a death benefit that covers all of your expenses and debts, as long as the required premiums are paid. It also offers other benefits that can be useful for you while alive, including the ability to borrow against your policy’s accumulated cash value and earn tax-deferred interest on it.
Unlike term life insurance, the cash value component of whole life insurance grows tax-free over time. It uses a portion of your premium to invest, with a guaranteed rate of return and no risk of loss. You can withdraw or borrow against your accumulated cash value, but if you do not pay the amount borrowed back, it will reduce your death benefit.
Whether whole life insurance is right for you depends on your personal and financial needs. Assess your goals and consult a licensed life insurance agent or financial professional to determine the best fit. When you’re ready to start looking for the right life insurance policy, be sure to choose a company with excellent ratings by independent sources for financial strength and stability. You can find out about a company’s rating by checking its financial reports, which should be available on its website. You can also ask your family, friends and colleagues for a recommendation or look up a company’s rating on an independent organization’s website.
Universal Life Insurance
Unlike whole life insurance, universal life policies offer flexible premium payments, meaning you can increase or decrease them within certain limits. However, doing so can impact the death benefit and cash value amount of the policy. Therefore, it’s best to work with a fee-based financial advisor or life insurance agent before making significant changes in your premium.
In addition, UL policies allow you to allocate some of the premium into an investment account that will grow over time. These investment accounts are often invested in bonds and other relatively stable investments, but they can also be impacted by market fluctuations. As a result, these policies typically have lower cash value accumulation than whole life coverage. They also have a higher chance of lapsing than whole life insurance.
Many people who buy a UL policy choose to pay the maximum premium for the first few years of the policy in order to build up the largest amount of cash value possible. They then use the cash value to help pay their premiums later in life, when they may have a smaller income. This can be a good strategy, but it’s important to keep in mind that if your cash value runs out, your policy could lapse.
UL policies are more complex than term and whole life coverage. Because of this, they require more ongoing monitoring to make sure that they are still meeting your life insurance goals. They also have the potential to generate higher returns than whole life or variable life insurance, but they come with greater risk of a lapse if the policy is not managed properly. Because of these risks, a UL policy should only be considered by savviest investors who are willing to take on the extra risk and expense associated with this type of life insurance. In fact, indexed universal life insurance is so controversial that consumer advocacy groups have warned against it. Nevertheless, this type of insurance is one of the most popular forms of permanent life insurance on the market. This is likely due to the aggressive marketing techniques used by some insurance agents.
Variable Life Insurance
A variable life insurance policy is a permanent policy that has a cash component that can be invested in a variety of instruments. These policies are regulated as securities, meaning that they can be subject to the same investment risks and rewards of stocks, bonds and mutual funds.
Unlike whole life or term life insurance, the death benefit of a variable policy depends on the performance of the separate account funds. This means that if the investment portfolio experiences losses, your death benefit could decline, and this can potentially cause your policy to lapse.
On the other hand, if the investment funds perform well, your death benefit can increase. The amount that your policy accumulates in the cash component can also depend on the amount of premiums you pay and how much of a death benefit you opt to purchase.
Some variable life insurance policies offer a choice of investment options, which allows you to allocate your money based on your financial goals and risk tolerance. This can lead to higher returns than a traditional whole or universal life insurance policy, but it’s important to understand the potential for investment losses before choosing this type of policy.
The investment component of a variable life insurance policy typically comes with fees and charges, which can add up over time. These costs are passed on to the policyholder and can reduce your overall returns. Additionally, some variable life insurance policies allow you to direct a portion of your policy’s cash value toward a fixed interest account, which can offer a lower rate of return but is less risky.
For these reasons, it’s best to avoid variable life insurance unless you have a specific need for permanent life insurance and you are willing to assume investment risk. If you’re considering this type of life insurance, it is essential to consult a financial professional who can help you determine your needs and review any policies that may be available to you. Before you buy, it’s a good idea to read the policy’s prospectus, which will spell out all of the policy’s fees and expenses, investment options, and death benefits. You can find prospectuses online, and you should always ask questions if you don’t understand any part of the policy.