Reasons for Getting Multiple Life InsuranceIf you would like to have higher amount of benefits for your family, increasing the rate of your life insurance is one of your options. However, if you already have an existing policy, you may not be allowed to change the rate, as it is usually fix. Another option is to get additional life insurance. People have varying reasons why they do this.
- Additional children. If more children were born after the life insurance was purchased, the benefits may no longer be enough for the whole family. Additional policy may be purchased to make sure that the family will enjoy a good life even after the policy holder passed away.
- Budget issue. Some people have universal life insurance then purchase a term life insurance. Universal life insurance is more expensive than term life. Higher benefits also mean bigger premiums. Those that cannot afford to pay a higher rate on universal life insurance, gets an additional term life insurance, which is generally cheaper.
Whole Life Insurance
Whole life insurance or also called universal life insurance is a policy that would last for a lifetime. This remains active until the demise of the policy holder and as long as the premiums are paid. There are various options to choose from under a universal insurance. This type of insurance also has its advantages and disadvantages.
Whole Life Insurance Options
- Traditional. The cash value on this type of whole life insurance has a guaranteed minimum rate. This means that you can be sure that you will get a specific amount on the cash value no matter what. The interest rate is also fixed.
- Interest Sensitive. It also has a cash value guarantee. However, the interest rate may change depending on the market condition.
- Single Premium. This is a type of whole life insurance in which the total premium is paid up front. This is best for those with a lot of cash as they don’t have to worry about monthly payments.
- No Expiration. As long as you pay your premiums, you can be sure that your loved ones will receive the complete benefits regardless of the time of death. Since death is unpredictable, this is the best way to ensure that you will always be covered.
- Cash Value. Whole life or permanent insurance has cash value that can be used for retirement or health care on your old age. If the amount was not withdrawn, this would be added to the claims that the beneficiaries will receive.
- Expensive. Universal life insurance is generally pricier than term life insurance. This may be a concern for those on limited budget.
- Lifetime Payment. The premium rate is fixed and must be paid as long as you live.
Term Life Insurance
Term life insurance is only limited. It can be from 1 to 30 years depending on your preference. With this type of insurance, you will only pay for the duration of your policy. For instance, if you bought a 15 year term life insurance, you need to pay the premiums for 15 years so that you will be covered until it expires.
Term Life Insurance Options
- Non-guaranteed. With this type of policy, you will be paying for your life insurance for a year. Medical exam is needed for this. If you die within the year, your loved ones will receive the benefits. This is not renewable so you need to apply for a new policy on the following year, which would require another medical test.
- Annual renewable. Like the first option, this will also cover you for a year. However, since this is renewable, you could renew the policy without having to take another medical examination.
- Level premium. This type of term life insurance has a fix rate that can last from 5 to 30 years, depending on your preference. Some level premium policies can be converted to whole life insurance.
- Cheaper rate. Most people choose this type of insurance because it is generally less expensive than permanent life insurance.
- Fixed rate. The premium rate usually does not change until it expires.
- Limited coverage. Coverage is only until before the expiration of the policy is reached. If you die after the policy expires, your family will not get anything. If you lived after the expiration, your loved ones will also not get the benefits.
- No cash value. Unlike permanent life insurance, you do not have extra amount saved that can be withdrawn.
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Choosing the right life insurance for you is important to make sure that the life of your loved ones would still be stable even on your demise. The information above can help decide which type of insurance policy to get. To determine how much you need to spend on your insurance, sign up.