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Understand Different Types of Life Insurance

Understanding Different Types of Life Insurance

 Life insurance is one of the most common employer-provided benefits. This article covers the basics of life insurance and the different types of employers can offer to employees.

 Types of Life Insurance

 Life insurance is divided into term and permanent (also sometimes referred to as whole).

 Term life insurance

 Term life insurance has a specified coverage period (term) but can usually be renewed or converted into a permanent policy. Premiums are generally affordable initially but can increase substantially when renewed.

 Whole life insurance

 Whole life insurance is a type of permanent insurance that offers life-long coverage combined with a cash-value savings component. This type of policy has higher premiums than term life. Whole life insurance pays a fixed amount upon death. Premiums remain constant throughout the policy, and a portion is invested by the company, which becomes the policy's cash value.

 Universal life insurance

 Universal life insurance is another type of permanent insurance policy that combines term insurance with the ability to earn interest on the cash value, paying a market rate of return. Cash value grows tax-deferred and can be withdrawn or borrowed from the policy. It is more flexible than whole life insurance as it also allows you to change your premium payments and death benefit within limits.

 Variable life insurance

 Variable life insurance is like universal life insurance in flexibility and an investment aspect. However, instead of simply earning interest on the accumulated cash value, policy owners have more control over investing that cash. The ability to invest in professionally managed investment options allows for the potential to accumulate cash value while providing death benefits protection. However, there is a greater risk of loss due to this benefit.

 Employer-sponsored Coverage

 Employers can offer a term policy, permanent coverage, or both. Cost-sharing also varies, as some employers cover the total cost, while some require employees to pay the entire premium (or a portion of it).

 Premium Amounts

 Rates for life insurance policies will vary. Women typically pay less than men due to their longer life expectancy, and rates increase with age. Also, smokers pay more than nonsmokers.

 Contact Songer Benefits, Inc. today for a better idea of the rates you can expect to pay for life insurance