What Are My Life Insurance Options?
There are three types of life insurance, with a number of differences between them, but boiled down term, whole and universal plans do the same thing — they payout a set amount of money to someone when you die.
Term Life Insurance: This option is geared toward younger people because it’s more of a temporary plan that only covers you for a period of time, usually 10, 20 or 30 years. If you were to stop living within that timeframe, a set amount of money would go to the people/person you choose.
Whole Life Insurance: It has the same concept as term, but this policy is forever (or until you die). It also has two added bonus's.
It has a savings account that accrues money. Eventually it will hit the policy’s coverage amount. At that point, the insurer will say something like:
“Hey, you have the same amount of cash in your savings as what we would pay you, so, you don’t need us anymore. Here’s your money. Good luck not dying or whatever.”
Whatever cash you accrue, you can borrow, but you’ll eventually have to pay it back to maintain continuous coverage.
Universal Life Insurance: It’s a lot like the whole plan but with more options.
Instead of a standard savings account, this also accrues interest.
You can kick in more money than your payment to take advantage of the interest.
Not only can you borrow from this account, but you can also skip payments without a penalty (as long as the account has money in it)