ROCHESTER, N.Y. – Life insurance is a critical yet often overlooked financial tool, especially for those who are the primary earners in their families. Financial experts emphasize the importance of understanding different types of life insurance to choose the best policy for individual needs.
Jarrett Felton, CEO of Invessent, explained the various types of life insurance available. “There’s term insurance. There’s permanent. And under permanent we have whole life and we have universal,” Felton said.
Term life insurance is popular due to its affordability. It provides coverage for a set period, typically 10 to 30 years, with a fixed death benefit. “So it’s a guaranteed death benefit and a level premium for maybe a 10-year period, 20 or 30-year period,” Felton said.
Whole life insurance requires paying the same premium throughout one’s life. It is more expensive but builds cash value over time, guaranteeing a fixed amount for beneficiaries.
Universal life insurance is less expensive than whole life and allows for premium adjustments within limits. It also builds a cash value based on market interest rates. However, the death benefit is not guaranteed.
Variable life insurance ties cash value to market investments, offering flexibility, while burial insurance covers end-of-life expenses with a guaranteed fixed amount.
“For those with term insurance,” Felton advised, “I would encourage you for step number one go to your insurance agent or maybe go directly to the source, the insurance company, and ask for what is called an in-force illustration.” It outlines the years remaining on your policy, current premiums and future performance.
Understanding life insurance can be complex, but resources are available to help simplify the options. Click here for NerdWallet’s comprehensive guide along with recommendations.
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Consumer Alert: Choosing the right life insurance for your family’s needs WHEC.com.
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