One of the most important decisions you’ll ever make is deciding what type of life insurance policy to settle for. Should I get Term Life Insurance with living benefits or Cash Value Insurance? Most people go for a cash value policy because it provides them with more coverage, but this may not be true for everyone. In this article, we break down more on Ieuter Insurance Group and help you decide which insurance is best suited for your needs.
Term Life Insurance with Living Benefits
This type of life insurance pays out the death benefit during your lifetime and continues to pay benefits after you die. The size of monthly premiums is based on how much coverage you want, and this will be adjusted for inflation every year.
The living benefit provides an income replacement if you are disabled and cannot work. The benefit is equal to a percentage of your income, up to 100%.
Here, the death benefits stop when you pass away. This means that if you have dependents or other family members who rely on your income to live comfortably, this might not be the best policy for you.
It is designed to cover you for the rest of your natural life. In most cases, this means that if something happens to you before age 100 or so, your beneficiaries will receive an amount equal to what was originally paid in premiums (minus any expenses). This type of policy is designed to be renewable, meaning that the premiums can change as you get older. If something happens and your policy lapses (meaning it has not been paid for 12 or more months), you will most likely have to start paying higher rates because we now know you are at greater risk of needing long-term care.
The one thing that people do not always like about this type of life insurance is that you usually have to pay for the total amount in advance, meaning there are no monthly payments. You should also keep in mind that if your company discontinues a policy, they will only refund what has been paid out as premiums and nothing else. If you might need to have a lump sum of money in the future, this may not be the best type.
Cash Value Insurance
This is one of the most common types of life insurance that people buy because it generally has lower monthly premiums than term coverage. It does not cover your entire lifespan but instead provides an amount equal to what was originally paid in premiums. The company will pay out the cash value of your policy at some point. Usually, they stop paying for your monthly premium after you have reached a certain age or if an event has happened, such as death because of sickness.
If something were to happen and you lapse (meaning no payments for 12 months), then most likely, this type of policy will be canceled. Unlike term life insurance with living benefits, the company will only reimburse you for paid premiums and nothing else.
If you are looking to cover your family members, then this type is more suited for that because if they want their money back when it lapses, they can take it out of the cash value.
If you want to cover yourself from death or long-term care expenses without being able to afford to pay for it in advance, then this type of policy may be the best choice for you.
Which should you choose?
The best thing to do is to go with whichever one makes the most sense for your needs. Do not feel pressured into buying what everyone else has because that may not be the right decision for you. If you are looking forward and need more coverage, then term life insurance would make more sense. If you are looking to save money and do not want lapses in coverage, cash value insurance may be a better option.
We have covered the different types of life insurance for people looking to purchase coverage. We looked at whether you should get life insurance with living benefits or cash value insurance and then took a look at what each type entails, including some pros and cons. The best thing to do is go with the one that makes sense for your needs because you know what you need and wants the most. However, make sure to do some research first before deciding on a coverage.