Types of Life Insurance Policies to Consider When Starting a Family
When you’re thinking about getting life insurance, it can be difficult to know where to begin. There are so many different types of policies available that deciding on the right one can be challenging. Fortunately, we’ve put together this list of the most common types of life insurance policies so that you know exactly what to look for when buying a policy. If you’re just getting started with your personal finances and need some guidance in the finance department, don’t worry. Even if you aren’t quite ready to start thinking about retirement yet, reading this will at least give you an idea of the different types of life insurance policies out there and which one would be the best fit for your family.
If you’re getting a long-term insurance policy, term insurance is the best type to choose. In this type of policy, you select a set period of time (usually years) during which you want to be covered. Most policies come with a term that begins when the death of the primary policyholder (usually you) first becomes apparent. After that, all of the benefits that come with the policy kick in, including death benefits, lifetime inflation protection, and money purchase protection. If there is a change in the primary policyholder’s condition, you can adjust the length of the policy to reflect the new circumstances. If you’re thinking about adding term insurance to your existing portfolio, you might also consider an “all-risk” policy. This type of policy will cover both death and an expansive range of other losses. You can read more about all-risk policies here.
Unit Linked Insurance Plans
A unit linked insurance plan is the most common type of life insurance. You create an account with the policyholder and put money into the plan. When the account is full, the policyholder pays out a predetermined amount to you, with a small portion going to the insurance company. There are many variations on this theme, but most share the same basic idea. Let’s say you and your spouse are both in the 5000$ category and you planned on having life insurance for yourself for 5000$. In this case, your unit linked insurance plan would pay out the full amount of 5000$ to one person or the other.
An endowment plan is a simple way to protect your family during hard times. All you have to do is select an amount to protect and an investment strategy to put your money into. The money will grow tax-free and, at the end of the term, you’ll receive a check for the full amount. This is the best type of life insurance to choose if you’re willing to sacrifice some of the growth potential of an investment portfolio for peace of mind.
Whole life insurance
A pure play on the insurance industry, the whole life insurance policy is the most conservative type of insurance available. You purchase a whole life policy that pays out a predetermined amount to you at the time of death, as long as you make a Will. The premiums for this type of policy can be quite high, so make sure it’s a policy you’re willing to put up with for the long term. If you’re a frequent flier, you may have heard about the “air miles” policy. This is a type of whole life insurance that pays out a portion of the miles you fly. The amount of miles you can earn depends on the age of the policy and the expected number of years you’ll fly.