There are many kinds of life insurance coverage on the market now.
When you consider all the kinds of life insurance policies available as a whole you can break it down into basically two types:
Whole vs Term Insurance
Term Life Insurance is simple. It is basically pure life insurance. Nothing else. Just like auto insurance.
The more expensive route would be to buy whole life insurance.
It is set for a period of time so you can buy term life insurance in time increments of 1 year up to 30 years (may be more or less depending on the life insurance company that you buy life insurance from).
- Pure Life Insurance
- Of the two types of Life Coverage Term Life insurance is the cheaper of the two
- Sold in time increments of 1 year to 30 years
What term life insurance company to buy from?
Once you have decided you would like to have life insurance it is best to comparison shop through each quote for life insurance and retrieve several quotes to compare from different life insurance companies.
Check their financial credit ratings in the list of life insurance quotes. It's generally ABC's but there may be different symbols used depending on which rating system is used for life insurance companies.
Example: Highest Rating / Financial Strength Rating of Company:
- Standard and Poor's: A++ (Secure/Superior)
- A.M. Best: AAA (Extremely Strong)
- Moody's: Aaa (Exceptional)
- Fitch: AAA (Secure/Highest)
- Acceptable Financial Rating Strength
- Standard and Poor's: S (Rating Suspended)
- A.M. Best: R (Regulatory Action)
- Moody's: C (Lowest)
- Fitch: SR (Suspended Rating)
The 2nd of the two main types of life insurance is Whole Life Insurance.
Whole Life Insurance, if you are planning to purchase it is basically term insurance with an attached investment within the life insurance company. It is sold to families stating that they are investing to save for retirement or saving for their kids' college fund. It's quite a bit more expensive than Term Life Insurance.
The insurer will make available to you many, many investment options that they offer within their company like savings, money market, mutual funds and some stocks.
Types of Whole Life Insurance:
- General Whole Life Coverage
- Variable Life Insurance
- Universal Life Insurance
Those types of life insurance are directly related to the investment vehicles the policies are associated with.
Time period for Whole Life Insurance:
Each month you will pay life insurance premiums until the day you pass on.
One option with the investment portion is that you are able to borrow from your own money and then pay it back with additional interest for using your own money. If you pass on your family does not receive the investment and only the death benefit.
In regards to the investment vehicle you choose you basically can borrow your own money and continue to pay premiums each month to it.
Whole Life Insurance in summary:
- Term Life Insurance bundled with Investment
- Time period: Rest of your life
- Whole Life Insurance offers many types of investment options
- Family will not receive Investment portion on death of insured
The right type of life insurance coverage to purchase is Term Life Insurance. If you get Term Life Insurance you can take the money that you would save from buying a whole life insurance policy and put that in your pocket, in a savings account at the bank or in ANY investment vehicle you'd like and you will never, ever have to borrow it from any insurance company
Our Life Insurance Recommendation:
Do not purchase a life insurance policy with any type of investment vehicle attached it. They were never meant to go together. When you have dependents counting on you and your income, go for cheap term life insurance
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