What types of life insurance policy could be right for you? If you’re just starting to shop, you might not know what you need, let alone how much. We’re here to help! We’ll go over three big questions to ask that will help you narrow your options down.
➡️ Want to talk to a real person to help figure out what you need? Our licensed life insurance advisors are super friendly, and they’ve helped thousands of clients who need answers, not a sales pitch. Call us at (800) 823-4852 to get personalized advice or start with a free term life quote by clicking the button below!
Get a Free QuoteMedical Exam vs. No Exam Policies
One key decision you’ll have to make is between policies that require a medical exam and policies that do not.
Traditional life insurance policies require a free medical exam. The insurer pays for this because they want a clear picture of your current health. A mobile medic examiner will come to your home or office and measure your height and weight, as well as collect blood and urine samples. The insurer will analyze this data and use it to assign you a risk class. This risk class is what determines the final price of your coverage. For people who are young and in good health, the risk to the insurer is low and they’ll over low prices to match. If you’re over 50 and/or have a few health issues, the risk to the insurer is higher, and you’ll pay more for coverage as a result.
No exam policies do not require a medical exam. But the life insurance company still needs information about you, so they’ll ask you to complete a medical questionnaire about your health history and lifestyle. To verify your answers, they’ll use public records and databases, ranging from DMV records to the national prescription database. They’ll use your answers plus the information they’re able to find about you to assign you a risk class. Because the information isn’t as immediate as the health data they get from the medical exam, insurers usually charge a little more for no-exam policies.
So which should you choose? If you’re in good health, we recommend taking the medical exam. You’ll save money in return for one day of potential inconvenience. However, if you’re pressed for time or have a fear of needles or other reason you cannot take the exam, you can opt to pay a little more for speed and convenience. It’s up to you!
➡️ Want to talk to a real person to help figure out which types of life insurance policy could work for you? Our licensed life insurance advisors are super friendly and ready to help. Call us at (800) 823-4852 to get personalized advice or start with a free term life quote by clicking the button below!
Get a Free QuoteTerm vs. Cash Value Policies
Another key decision about the types of life insurance policy to pick revolves around the length of coverage. There are two main types to decide between:
Term life insurance. A term life policy will cover you for a limited amount of time: 5, 10, 20, 30, or 40 years, for example. It’s the simplest and cheapest way to get covered on a budget. You can get term life policies with traditional underwriting (by taking the medical exam) as well as no-exam policies. The trade-off for low rates? Your policy will expire at the end of your term. Your insurer will give you an option to renew on a yearly basis, but it’s expensive and the price on a renewal goes up again each year. It’s most affordable to buy the longest term you anticipate needing instead of counting on renewing later.
Cash value life insurance. A cash value policy will cover you for the rest of your life (or until a particular age when the policy matures, such as when you’re 90 or 100). If the policy matures while you’re still living, you get the death benefit. If you pass away before the policy matures, your beneficiary(ies) get the death benefit. There’s also a cash value account attached to your policy that grows over time with a portion of your payments and interest credited by your insurer. There are cash value policies with traditional underwriting (by taking the medical exam) as well as no-exam policies, although there are far more options when you take the medical exam.
So which should you choose? That’s going to depend on your coverage needs and your budget. If you’re on a tight budget, term life is always going to be less expensive. Cash value costs more both because of the lifelong coverage and the cash value growth. However, that cash value is a financial asset many of our clients want to have. Later, once your cash value has grown, you can borrow against it or take partial withdrawals from your insurer. It’s a way to sock away cash and keep it liquid, where it can grow tax-deferred.
➡️ Want to talk to a real person to help figure out which types of life insurance policy could work for you? Our licensed life insurance advisors are super friendly and ready to help. Call us at (800) 823-4852 to get personalized advice or start with a free term life quote by clicking the button below!
Get a Free QuoteSafe & Steady vs. Variable Interest Rate Cash Value Policies
If you decide that cash value is the policy for you, there’s one more decision to make: what type? There are multiple types of life insurance policy that grow cash value – but they all grow in different ways at different rates. The right choice for you will depend on your goals and your risk tolerance. Here are your options:
Whole life. This is the simplest type of cash value policy. Cash value grows at a set interest rate assigned by your insurer are the time you buy your policy. It’s safe, steady, and guaranteed. You always know what you’re going to earn, and there is zero chance of loss thanks to the locked-in rate.
Universal life. Universal life has a lot of flexibility. Instead of a required monthly payment amount, you choose how much to pay and when. It’s up to you to keep the policy funded with at least the minimum amount required, as set by your insurer. Your cash value grows at a variable interest rate that the insurer will change periodically to keep it in line with prevailing rates.
Indexed universal life (IUL). IUL takes the flexibility of universal life and adds a new component: the ability to tie your cash value growth to the performance of a market index such as the S&P 500. You’re not actually investing in that index, so there’s no chance of loss. However, when the market does well, you will be credited with more interest. When the market does poorly, you will be credited with less interest (or maybe even zero interest, depending on your insurer). This policy type is popular because of the chance to take advantage of market gains while being protected from its drops.
Variable universal life (VUL). VUL expands the possibilities for your cash value growth by letting you invest in options provided by your insurer (stocks, ETFs, etc.). Unlike with IUL, you’re actually investing your cash, which means there’s the potential for faster, higher growth…but also the potential for loss. This type of policy is best if you’re truly interested in investing and can do the research and make smart choices as to where to place your money.
Those are a lot of options! And it can really help to talk through them with someone who truly understands how each policy type can help you. That’s exactly what we’re here for.
➡️ Need to talk to a real person to help figure out which types of life insurance policy could work for you? Our licensed life insurance advisors are super friendly and ready to help. Call us at (800) 823-4852 to get personalized advice or start with a free term life quote by clicking the button below!
Get a Free Quote