Life Insurance Types
Life insurance policies come in two primary types: both whole life and term life insurance policies are available as Texas life insurance depending upon your needs and what you want to get out of your life insurance policy. You will need to have a basic understanding of each of the two types of insurance before you buy a policy.
Whole Life Insurance
Whole life insurance policies are the "fire and forget" policies of the Texas life insurance industry. A type of policy that is purchased once for a set price that you pay for life in order to maintain the policy, a whole life insurance policy brings with it benefits that a term policy does not carry. Since the price you pay when you sign up for a whole life insurance policy is the same price you will be paying the day you die, you don't have to worry about your premiums increasing and making payment more difficult. This serves as a hedge against inflation and other financial factors that could otherwise make getting life insurance later difficult. It also means that the younger you are when you buy a whole life policy, the more money you will save over your lifetime.
While whole life policies all come with various types of cash value accounts that you can use in different ways to assist you in life as the policy grows and matures, there are different types of policies under the whole life umbrella that you may be interested in exploring and choosing from as you shop for insurance:
- Traditional Whole Life: Traditional whole life insurance policies are the "traditional" type of insurance that remain in effect for your whole life as long as you maintain the policy by paying the premiums and pays a single, fixed benefit amount upon death.
- Indexed Universal Life: An indexed universal life policy ties the premium and the death benefit payment to the performance of a specific financial index. This means that your rates can change throughout your life, going up or down, but then again, so can how much of a death benefit will be paid once a claim is made.
- Variable Life Insurance: Similar to an indexed policy, the performance of these policies will fluctuate based on the investment options chosen with the cash value account. Under no circumstances will the death benefit be allowed to fall below a certain minimum, however.
- "Survivorship" Life Insurance: This type of life insurance is usually purchased by the wealthy or those with substantial assets that are likely to be heavily taxed when the estate is passed on. This policy only pays a benefit when both parties (usually husband and wife) die, and is most often used to pay the taxes on the estate so that their children can inherit free and clear.
Term Life Insurance
A term life insurance policy pays your beneficiaries a death benefit when you die. The amount paid is flat and set when you sign up for the policy and does not change. Your rates while you have the policy do not change, but a term policy is purchased for only a specific time period, usually anywhere from 1 to 30 years. Once the policy expires you will have to renew which will usually be more expensive due to your age and or health conditions that may have developed since you got your last policy.
