Choosing Between the Different Types of Life Insurance

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By David

Navigating the world of life insurance can be confusing, whether you are looking to purchase a policy or wondering whether you still need the one that you currently have. Below are a few of the questions you might have at various points in your life about your policy.

Cancelling a Policy

Even though it’s called life insurance, it’s not necessarily for life. Not only that, but if you decide you don’t want your policy any longer, your choices may go beyond simply quitting paying your premiums and allowing the policy to lapse. In fact, if you currently have a policy that you think you no longer need, you might want to look into the cash value of your life insurance and review a guide on cash surrender value. Why would you need to cancel a policy? There are many different reasons. You may have purchased it because you had young children you wanted to make sure were provided for, but now they are adults. Your premiums might be too high, or you might simply want more money for retirement.

Choosing a Policy

Whether you want a term or whole life policy and whether your policy is an investment or something that you can let go for cash is one thing you might want to consider when purchasing life insurance, but there are other factors to consider as well. One is the reliability of the company selling the policy. For most, the cost will be a factor as well. In addition, you need to understand the many different options. Indexed universal has a cash value while guaranteed universal does not. Variable and variable universal are linked to certain investments and are good for people who want to be more hands-on in managing their policy as an investment. On the other hand, you might just want regular whole life or term in order to keep things simpler.

Choosing How Much

Getting the right amount of coverage is important as well. You don’t want to choose a policy and spend years paying the premiums only to have your family discover that only some of their expenses are covered. If you have minor children, you may want to figure out how many years of support they will need until adulthood. You might want to make sure that there is money to pay for college as well.

The Application Method

Another thing that may affect your choice is the process of applying. This is an example of one of the ways healthy living improves your life and opportunities. If you are in good health, you may want to go for a fully underwritten policy, but what if your health is not great yet you still need something to protect your loved ones? A simplified issue life insurance policy might work for you. You will not be required to have a medical exam but would instead complete a questionnaire. If you do not qualify for these types of insurance because of health issues, you could also consider guaranteed issue insurance, especially if you are middle-aged or older. This can be costly and may not offer as much in benefits but might be better than nothing.