What Type of Life Insurance Is Best For You?

Life Insurance Arlington helps ensure that your loved ones don’t suffer financial hardship when you die. It can help pay funeral costs and final expenses; provide income for your dependents; and pay off debts like mortgages or credit card balances.


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Life insurance provides a financial payout (often equal to the policy’s coverage amount) to your beneficiaries upon your death. This money can help them pay off debts or mortgages, cover funeral expenses, or even fund children’s college education. It can also provide them with a steady income that allows them to live comfortably without the worry of paying for basic living expenses.

In addition, some policies come with built-in features that can increase your cash value over time. For example, some whole life insurance policies offer a guaranteed minimum interest rate on the accumulated cash value. Other policies allow you to alter your premium payments or death benefits, within certain limits. Still others have investment subaccounts that you can choose and manage.

The main reason to get life insurance is to provide a safety net for your loved ones. However, there are other reasons you may want to consider it as well.

You may want to purchase life insurance to replace your lost earning potential, cover business debts or buyout partners in the event of a partner’s death, pay for retirement planning, or fund a trust or estate. You may also have other expenses that you want to ensure are covered, such as child care costs or medical bills.

If you’re thinking about purchasing life insurance, you should first analyze your financial situation and determine how much coverage you need. A good rule of thumb is to take your annual expenses and multiply them by 10. This number will give you a rough idea of how much coverage you need.

Once you have an idea of how much coverage you need, you can compare different options to find the best life insurance for you. Some factors to keep in mind include the length of the policy term, the death benefit, and the cost. Another consideration is the health of the applicant, as this will have a direct impact on your rates. Also, consider any lifestyle habits that could lead to increased risk, such as a dangerous job or hobby.

Term Life

Term life insurance is usually the most affordable option for most people. It pays a death benefit for a specific period of time (a “term”), typically 10, 20, or 30 years. Unlike whole life insurance, it does not build any cash value that you can borrow against or invest, and it ends at the end of its term instead of providing lifetime coverage.

A term policy can be a great way to pay off debts or provide income to your family after you die, especially if you have young children. It can also help cover funeral costs, estate taxes, and other expenses. Some people choose to end their term life policies when they reach the end of their term, but it’s important to be sure you really don’t need the coverage anymore before doing so. If you do decide to end your term life policy, make sure you get quotes for a new one so you can compare the options.

Some types of term policies can be renewed, but only up to a certain age and at a higher rate. Some also include a guaranteed renewal feature, so you won’t have to take a medical exam to renew the policy for an additional term, but this will increase your premiums. Guaranteed issue life insurance is a type of term policy that is easier to obtain than traditional policies without having to take a medical exam, but you may not receive the full death benefit if you are diagnosed with certain health conditions.

There are several different types of term life insurance, but the most common is level term. This is the simplest and most affordable version, and it offers a level death benefit for the duration of the term. Other options include decreasing term, which has a reduced death benefit over the course of the policy, and annual renewable term, which allows you to renew on a year-by-year basis and may increase your premiums each year.

Many term policies are convertible to permanent life insurance, which will offer a permanent death benefit and build cash value, but this will add to the cost of your premiums. You should talk to your agent to learn more about the benefits of each type of life insurance.

Whole Life

Unlike term policies, whole life insurance continues to pay out your death benefit as long as you continue to make your premium payments. It also offers a cash value component that acts like a savings account. Each premium payment is added to your policy’s cash value, which accumulates interest on a tax-deferred basis. You can access this money at any time for emergencies, supplemental retirement income or to cover final expenses. Withdrawals and loans are subject to a fee, but you can also leave the amount in your policy to earn additional interest. This is called a “living benefit” and it is one of the key benefits of whole life insurance.

In addition to a guaranteed death benefit, whole life insurance provides living benefits that can help meet many of your family’s needs. These include coverage for loss of income, mortgage costs, educational expenses and leaving a legacy. Many whole life policies also come with several riders and additional benefits, such as premium waiver and chronic illness coverage.

With whole life insurance, you can choose from a non-participating plan or a participating policy. The difference is that with a non-participating policy, the excess premiums paid go toward profit for the insurance company. With a participating policy, the extra money is redistributed to you as a dividend. You can use these dividends to help pay your premiums, withdraw them or take out a loan against the policy. Dividends are not guaranteed, but insurers like MassMutual—a CNBC Select pick and top-rated insurer—have a history of consistently paying them.

When choosing a whole life insurance policy, you want to be sure you’re getting the coverage you need at a price you can afford. It’s important to discuss your situation with a financial professional who can help you understand the options available and find solutions that work for you. A financial professional can review your entire picture, including your other investments and assets, to help you develop a strategy that fits your goals. They can also connect you with a whole life insurance agent who can help you determine if this type of protection is right for you.

Variable Life

Unlike whole life insurance and universal life, variable life insurance (VUL) contains an investment component. This means that the cash value can be invested in a range of asset options, like equity and money market funds. The performance of these investments will have an impact on the death benefit and cash value.

This makes VUL ideal for clients who are comfortable with investing their life insurance policy. They should also be willing to review their policy with a wealth management advisor regularly and adjust their investment choices and death benefit as their financial circumstances change.

In addition to the potential for higher returns, VUL can offer greater flexibility than other permanent policies. Clients can choose to overpay or max fund their policy in the early years and then reduce their premium payments as they approach retirement, allowing them to preserve their death benefits while meeting their long-term financial goals.

As with any investment, VUL has fees and expenses. These include internal policy costs, which can be a significant portion of the premium. In addition, the investments underlying the cash value have their own fees and expenses. Depending on how the investments perform, a VUL can have very low or very high internal costs.

Because VUL is a complex financial product, it is important to carefully review all of the associated charges with your clients. They should be aware of the fees and expenses that may apply to their individual policy and understand how these charges can affect the overall value of their policy.

A comprehensive understanding of the benefits of life insurance and the different types is essential for a client to make informed decisions about their coverage. With the help of a Thrivent financial advisor, they can better understand which type of life insurance best fits their unique needs and risk tolerance. Our streamlined client intake and digital forms make it easy for clients to complete the necessary paperwork from the comfort of their home. This helps to minimize paperwork-related mishaps, expedites the underwriting process and ensures that clients promptly receive their coverage.