What Type of Life Insurance is Right for You?
Posted: April 30, 2020 by Tamara Foote
Guest post written one of our Coldwell Banker Premier Realty Premier Service Providers, Natalie N DeNardo with the Natalie DeNardo Insurance agency
Making sure your family is protected in the event of an unfortunate circumstance is priceless, but did you know that there are many different variety's of life insurance? Before making the derision to purchase, consider what plan is right for you and your needs.
During these unprecedented times, you may start to wonder if it is a good time to look into a life insurance policy to get peace of mind that your family is protected in an unfortunate circumstance is priceless. Did you know that life insurance is not one size fits all? One of the biggest questions I receive is "What type of plan is right for me?" Here are the different types to consider.
Term is the least expensive type of life insurance out there. The reason that it is inexpensive is because it begins, and it ends. There is no financial benefit in this type of policy unless the person passes away within the term of the policy.
Whole life is the most expensive policy on the market. Why? Because it’s a permanent policy. Once you apply and the policy is approved you are locked in for the life of the policy as long as you continue to pay it.
Variable Universal Life Insurance
This policy is a 2-1 kind of a policy. It’s a lifelong policy with a savings account attached. The money in the savings account grows tax free because it is under the umbrella of a life policy. The IRS looks at the money when you withdraw it as a loan against your life policy, so you don’t pay taxes on gains. This policy is great for someone who wants to build a tax free retirement, Savings for a young child (example saving for college however uncertain if the child will go to college you can save in the life policy and then you determine where the money goes.)
**** This type of a life policy is an investment and does get based on your risk tolerance. Please take into consideration that because it is an investment the cash value can vary depending on the market.
Universal Life Policy
This is like the variable policy however there is no risk tolerance requirement because it is based on a guaranteed rate
Index Life Policy
This policy is like the Variable Universal policy however it differs with risk tolerance as follows: This policy offers market downside protection. It has a ceiling and a floor. Meaning floor is 0% and the ceiling is 8%! If the market does well for the day you are capped at 8% and if the market does terribly your floor is zero.
For more answers to all your insurance questions, check out Natalie's blog, Insurance Untangled.