Types of Permanent Life Insurance Explained Simply

Too many people don’t think about what will happen to their families after they die. Death is an unpleasant topic to think about, but making the right preparations ahead of time will help ease the burden of thinking about the end of life. A life insurance policy is a way to cover the financial burden of final expenses and the loss of a source of income.

Permanent life insurance Newark DE policies will stay in place your entire life so long as you pay your monthly or yearly premiums. They also build cash value that you can borrow against or put towards premium payments. There are four main types of permanent policies: whole life, universal life, variable life, and final expense.

1. Whole Life

This is the simplest type of permanent policy and is the most common. Your cash value has a fixed interest rate and a fixed death benefit. With no variables to worry about, you will always know exactly what you have and that it will always be there.

2. Universal Life

These policies offer more flexibility than whole life. The interest rate has a guaranteed minimum but is not fixed. It fluctuates with the market and as such can accrue cash value that can pay off premiums for the life of the policy.

3. Variable Life

For smart investors, this option provides the greatest opportunity for return. The cash value is invested into stocks of the policyholder’s choice and will rise and fall depending on those investment choices.  This is the only type of permanent life insurance where part or all of the cash value can be paid to your beneficiary along with the fixed death benefit.

4. Final Expense

The purpose of final expense coverage is only to cover funeral costs, not to support the insured’s beneficiary. However, any death benefit not paid to the funeral home after all expenses are covered will be paid to the beneficiary. This type of policy can stand on its own, or be a rider (additional benefit) on a whole, universal, or variable policy.