When going grocery shopping, did you ever notice that there is a whole aisle of cereals to choose from? There are dozens of varieties. With life insurance it is similar, there are many varieties to choose from; however, you have an advantage with life insurance because you get help from your agent at The Shay Agency serving Wilkes-Barre, PA, and the nearby areas.
Think of your agent as a personal shopper’s helper, who will give you an intelligent recommendation of the type(s) of life insurance that will best fit your needs.
The Two Biggest ‘Flavors’ of Life Insurance
Like chocolate and vanilla, there are two broad categories of life insurance. One is the type of policy that builds up cash value over time and therefore has some investment/savings qualities. This most popular of this type is called “whole life” because it is meant to be put into place while young and then kept for protection and investment purposes for a person’s entire life.
The other is the type of life insurance does not build up value and lasts only for a certain number of years before you need to renew it or get a new policy. The most popular type of this kind is called “term life.”
Universal Life vs. Whole Life
Universal life insurance is a mixture of the characteristics of whole life and term life. Universal life insurance is considered “permanent” like whole life insurance because it does not have a time limit. At the same time, universal life has lower premiums than whole life. These lower premiums are similar to term life insurance.
Whole life insurance has a death benefit and consistent monthly premiums. It has a guaranteed increase in its cash value over the life of an insured person. Whole life pays an annual dividend that either accumulates or can be taken out. Once the whole life policy has a cash value, you can borrow against it
Universal life has a death benefit, flexible premiums, and a savings option that can be chosen to build value. If it has a cash value because of choosing the savings option, you can borrow against it.
There are many other types of life insurance to consider. Each type is useful for different purposes. The characteristics to consider are the investment/savings portion and the insurance portion, along with the premium schedule.
In some cases, it may be beneficial to have two separate life insurance policies for different important reasons such as whole life to create long-term value and term life for protection against unexpected risks when younger.
To get personal help making these choices, contact an agent at The Shay Agency in Wilkes-Barre, PA by calling 570-704-0074 or use our convenient online form to get a quote.