When making a long-term financial plan, carrying life insurance policies should be on the top of the list. In reality, not everyone has life insurance. 60% of the American population carries life insurance. The majority of these policyholders admitted that they do not have enough coverage. The common misconception about life insurance, especially to the younger generation, is its cost overestimation. Another factor is the confusion on so many different products.
The Best VA Life Insurance policies vary depending on coverage, payment terms, payment period, and the cost of premiums. There are several types which fall into two different classes: cash-value life insurance and term life insurance.
Here’s a glance at what makes life insurance different from the other. Know which life insurance best fits your needs.
Term life insurance
The word “term” is used because life insurance is purchased for a specific period. A sum of money is paid to the beneficiary in case the insured dies within the term. This traditional type of insurance policy does not include any investment factor. The validity expires as the time matures. If the policyholder wanted more coverage, he needs to purchase another insurance policy.
Insurance companies offer varying portfolios like decreasing term insurance, wherein the death benefit is abridged over time. Clients may also opt to a level term life policy wherein the payout amount is maintained throughout the policy duration. Some insurance companies add a provision that lets the coverage renew despite the change in health status.
Cash-value life insurance
These types of life insurance policies have investment or savings features. Policyholders can enjoy the living benefits like withdrawing cash and earning dividends while keeping the policy for as long as possible. These are the four significant types of cash value life insurance:
Universal life insurance
This type has both a death benefit and cash value. Policy premiums can be adjusted, which means cash value can be accessed to adjust annual premiums. Policyholders have the option if they want to use their cash value to pay off premiums or leave it to generate more earnings.
Whole life insurance
Unlike universal life insurance wherein premiums can be adjusted, the premium in whole life insurance is locked. A certain percentage of the premium is assigned to the cash value, which grows during the policy’s entire life. The life insurance is similar to a savings account. The older the policy gets, the more cash value it generates.
Variable life insurance
The cash value of the best VA Life Insurance is invested in either equity or bonds or both. Policyholders can set a certain percentage on how much they want to invest in bonds or equity. It is an advantage if the policyholder knows how to forecast the financial market. Policyholders can withdraw cash, apply for loans, and pay off, including loan interest. Since cash value is invested in the market, this type of insurance requires hands-on managing of the funds.
Permanent life insurance
Unlike term life policies, which life is dependent on the term, permanent life insurance does not have an expiration date. It also has savings features. The older the policy gets, the more cash value or savings it has.
Aside from the significant types, insurance companies offer a range of policies designed to recompense death benefits in various ways.
- Joint life insurance
- Final expense insurance
- Survivorship life insurance
- Decreasing term life insurance
- No medical assessment life insurance
- Dismemberment and accidental death life insurance
- Credit life insurance
- Mortgage life insurance
The variety of life insurance policy that is best suits you will depend on the factors that you wanted to consider. Three primary things that must be well thought out:
- The desired time coverage of life insurance. Short term or long term coverage?
- The amount you are willing to pay regularly.
- The risk factors. Are you paying more for less? Or are you paying less for more?
Ideally, the amount of coverage should be equal to at least 12 times your current annual income. It is best to discuss all aspects of a trusted life insurance agent.
Without a doubt, the gift of life insurance is the ultimate expression of love for a family or a loved one: love that transcends beyond existence. Speak to your trusted insurance adviser about which life insurance policies are best for you.
About Blue Sky Insurance Agency
For over 20 years, family owned Blue Sky Insurance Agency has proudly specialized in insurance and tax services for Virginia residents. Our philosophy is simple: “If you can dream it, we can insure it.” We strive to provide value to our clients by establishing and building relationships and focusing on more than just rates. We are dedicated to providing holistic and strategically tailored solutions to protect all of your assets, and to provide peace of mind wherever life takes you. To get in touch with us, fill out a complimentary quote form, or call us at one of our two locations:
Phone: (804) 745-4044
PO Box 35674
North Chesterfield, VA, 23235
Hours of Operation: Mon-Sat 9am-6pm
Phone: (804) 404-2030
9932 Midlothian Turnpike
Richmond, VA, 23235
Hours of Operation: Mon-Sat 9am-6pm