Types of Life Insurance

Basics of Life Insurance

When you purchase life insurance, your policy establishes a contract between you and the insurance company to provide a lump-sum payment upon your death to your beneficiary in exchange for your timely payment of premiums. The Marla Williams Agency of Kansas wants you to understand that within that essential framework, you have many choices, beginning with whether you choose a term or permanent policy.

Those two main types of life insurance cover you for a different time period.

  • Term life: a term policy remains active for the specific time period enumerated in the policy documents. This typically refers to 10, 20, or 30 years.
  • Permanent life: a permanent policy remains active while the policyholder pays the premiums. When the policyholder either dies or surrenders the policy, it ceases to exist.

Term policies

With a term policy, you can pick from a level term or increasing term policy. The former refers to a policy with premiums that always stay the same. The latter refers to a premium that increases as you age.

Permanent policies

Most permanent policies require a monthly or quarterly premium payment. Still, you can purchase a single premium policy for which you pay the entire premium up-front in a lump sum.

You could choose a whole policy with a cash value account that lets you save part of your monthly premium in a money market or investment account. A universal life policy features a cash value account that earns interest. You can adjust the premiums and death benefits during the policy’s life. You might choose a variable universal policy, so you can save in your cash-value account and grow it by investing it, or an indexed universal policy with a cash value account that earns interest or invests using a fixed rate return or an equity-indexed rate of return.

You can also obtain permanent policies without a cash-value account, such as the guaranteed universal policy, which charges lower premiums than a typical whole life policy. If you have a pre-existing medical condition that has precluded you from obtaining life insurance, choose a guaranteed issue policy. It only pays accidental death in the first two years, but after that, you receive coverage for any death type except suicide.

Contact the Marla Williams Agency of Kansas today to obtain the life insurance policy for your situation.