Author: Ken Sutton
There are many different types of life insurance policies. You may have heard of some of the different types, such as: term life, whole life, or universal. Life insurance policies are a lot like vehicles, having the right policy or vehicle is important, depending on the goal. So how do you know if you have the right policy?
It is important to have the right type of life insurance policy in place. Some policies are designed to expire, some policies are designed to accumulate larger amounts of cash value, some policies are designed to last forever. There are many different reasons ad types of life insurance that exists, but we are going to talk mainly about final expense whole life insurance. We will talk about the correct type of policy for final expense, burial insurance. We will also take a look at what are incorrect policies for final expense, burial insurance.
Final expense, burial insurance is a whole life insurance policy. A whole life insurance policy is designed to last your whole life. The policy will never expire, as long as you maintain your payments and your premium will never increase. If you are in need of coverage that is going to be there when you die, not if you die, it needs to be whole life (there are some cases where a guaranteed universal may be a benefit to the client, this is a very specific case. Consolidate with an agent before making a final decisions). What about term life insurance? I hear it’s cheaper…
Term life insurance , or term, is short for terminate. It is designed to be there for a period of time. Typically to cover the income earners wages or a mortgage. The policy is designed to expire at the age of retirement or once the mortgage is paid off. Be careful…there are a-lot of policies that come in through the mail that look like final expense policies. The premiums typically start off lower than any other whole life policy but they become way more expensive over time.
Globe life, AARP and AAA are very good about marketing term policies, that start off at a very low rate, but increase at every 5 year age mark. I.E (60 – 65 -70 -75 -80). These policies seem like they would help you save money, but they can leave you in a really bad position…. If you can afford the premiums, as they skyrocket, just understand these policies typically expire once you reach age 80. Then you are left with no coverage and nothing to show for it. Also, it is much more affordable to get coverage the younger and healthier you are the older you get the more difficult it becomes. Don’t get stuck with a policy that is going to expire if you need it to be there for when you pass.
If you have a policy and it has been a while since you last took a look at it, taking a few minutes to call a licensed agent to help you review your coverage. It could save you and your family a lot of headache. If you don’t have an agent you are currently working with give us a call or click the contact button and fill out the form. We will have a licensed agent assigned to helping you out. Now, what if it’s not a term or a whole life policy? Well, that is a good question, typically that means the policy is a universal. AKA, flexible or adjustable or some form of that.
Universal policies are almost like a mixture of a term and a whole life policy. Term is like renting, it goes away. There is no cash value in term policies. Whole life is permanent, it does not expire and it builds cash value. Universal policies are cash value building products but have the ability to be adjusted. There will be more information about universal policies and how they work but for this article we are going to point out that 90 out of 100 times a universal policy is not the correct policy for a funeral or a cremation. If these policies are not maintained they have a very large risk of loosing a lot or all of their value.
So to recap, when choosing a life insurance policy it is important to know what you are covering so you can work with an agent to get approved for the right type of coverage. If you have questions about your current coverage or need help with an existing policy we have licensed agents ready to help. Give us a call or click the contact button and fill out the form. Also, you can always call your life insurance company directly and ask for them to review your coverage with you. If you would like a licensed agent to assist you we are here to help.