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The Different Types of Life Insurance

Updated: Aug 12


There are loads of factors when considering the best option for life insurance. Common factors include pricing, duration, and opportunities to use life insurance policies for investment.


Here are all of the elements Boone Ritter Insurance wants you to be aware of regarding the different types of life insurance:


The Two Main Categories: Term and Permanent Life Insurance


All types of life insurance will either be term life insurance or permanent life insurance.


In short, term life insurance policies will last for a particular number of years, and if you die within the time frame, your policy will expire payout-free. While permanent life insurance policies last an entire lifetime and involve a cash value, meaning you can withdraw from your policy or borrow against it during your lifetime. The obvious difference in these life insurance policies is time, but let's take a look at the finer details between term life and whole life.


Term Life Insurance


Term life insurance is generally sold for periods of 1-30 years. It's an excellent choice for anyone looking for life insurance on a budget, as it is often the cheapest option. It has consistently proved to be a good option for most people looking for life insurance.

The main drawback of a term life insurance policy is that your beneficiaries will not receive a pay-out if you outlive your policy.


Whole Life Insurance


Whole life insurance lasts until your death, on the condition that you pay the specified premiums. This makes it the best choice if you don't want to risk leaving your beneficiaries with no value.

The major benefit of whole life insurance is that it builds a cash value and lasts you an entire lifetime. However, these benefits are at a much higher price than more affordable options such as term life insurance.


What is Universal Life Insurance?


Guaranteed Universal Life Insurance results in a guaranteed death benefit; however, there is no cash value, and if you don't make a payment, you could forfeit the policy. This option is most compatible with people who are looking for a cheaper version of whole life insurance.


Indexed Universal Life insurance offers you the added benefit of attaching cash value to a stock market index outlined by the policy. This means your cash value will significantly gain if the stock market performs. However, your investments require monitoring, making this more laborious than a general term or whole life insurance. Your cash value is also subject to a cap with indexed life insurance. For instance, if your stock index rises by 15% but your policy caps at 10%, you will only receive a 10% pay-out.


Which Life Insurance is right for you?


What kind of investment, budget, and time you are planning for really decides what kind of life insurance is right for you. If you're looking to build cash value tied with the stock market, indexed universal life insurance might be best for you. However, if you want your insurance policy's cash value to work for you, then a standard whole life insurance policy might be better. If building cash value is not your main concern, and you want a more affordable option, then universal life insurance or term insurance may be the better choice for you.


There is a life insurance option out there that will suit your needs perfectly! Even if you already have life insurance, contact Boone Ritter Insurance and let us help you find the insurance options for you and your needs.


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