Life insurance is a heavy topic for many people, which leads to them asking less questions than they probably should, and that can result in the wrong kind of life insurance for some situations. For example, many employers offer term life insurance as a benefit and for some people that’s the only kind of insurance they’ve heard of. There are lots of other life insurance options besides term and whole life insurance though, and some are even cheaper than these options.
Here are three types of life insurance you may not know about but definitely should.
Variable Life Insurance
Have you heard of variable life insurance ? Probably not, because it’s one of the more pricey, and frankly more complicated, forms of life insurance which is why people overlook it rather than dig in deeper. The basics of variable life insurance are that it provides the benefits of life insurance while also offering an investment opportunity.
How it works is part of the premium is invested in an account of the policy holder’s choosing. Depending on the policy, these accounts can range from mutual funds to bonds to stocks. If you’re a savvy investor, you may be able to choose what kind of account to invest in. if you’re new to the game though, you may want to sit down with a financial professional and find out which plan is best for you and your current retirement strategy.
Basically, while the premiums are higher on these kinds of life insurance policies, they also act as an investment, which makes it a double threat in your portfolio. Additionally, the death benefit is guaranteed, even if the cash value goes down.
Final Expense Insurance
Some forms of life insurance are fairly straightforward, and final expense insurance is one of them. This does exactly what it sounds like which is provide the beneficiary with the funds to pay for the policyholder’s final expenses. Many people don’t think about how pricey funerals are, and in North America, the average is between $7,000 and $10,000. For most people, this is a huge amount of money to come up with, and it’s not uncommon to see crowdfunding pages with pleas from families to help give their loved ones the funerals they deserve. Not only are they dealing with a painful loss, but then the stress of spending thousands of dollars is heaped on top of that.
A couple benefits of final expense insurance are it’s permanent life insurance, meaning it’s valid throughout the policyholder’s life. Additionally, it usually requires less of a paperwork nightmare, with applicants only needing to answer a couple of questions before getting their insurance. However, since it is permanent instead of term, meaning no matter what the insurance company will make a payout in the future, it is a bit costlier.
Accidental Death and Dismemberment Insurance
While similar in some respects to final expense insurance, accidental death and dismemberment insurance protects the policyholder with not only death benefits in case of an accidental death, but also living benefits. Should the policyholder experience dismemberment or have to go on disability, then this type of policy will help make up for the lost income. However, before signing on the dotted line for this kind of insurance, check to make sure you understand how the company and policy will work when it comes to both the living and the death penalties.