What Are the Different Types of Life Insurance Plans That Exist Today?

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The United States insurance industry contributes about 3.1% of the nation’s GDP, according to Zippia’s website. If you apply that to America’s GDP in 2021 of $23 Trillion, then it works out that the industry put in $713 billion that year!

So the point we’re trying to make here is that the industry is huge. Life insurance is one insurance type that many overlook until it’s too late. Some solid advice if you want to protect your loved ones when you’re gone is to research different types of life insurance, and then get coverage as soon as possible for peace of mind.

In this post, we’ll discuss the different types of life insurance plans out there. This way you can make a better-informed decision on which one will suit your needs best. Read on to find the coverage you need.

Types of Life Insurance

There are two fundamental categories of life insurance. There’s term and permanent life insurance. Although, you can break down each category into various other associated types of life insurance.

In general, a term life insurance policy is the most popular but lasts for a certain period specified in the agreement. Permanent life insurance policies last all your life.

Let’s now look at what the insurance industry has to offer in terms of family protection:

Term Life Insurance Policies

If you are looking for an affordable and simple life insurance plan, then you should look into term life insurance. You pay into a policy for an agreed length of time and if you pass away in this timeframe then the insurance company pays out a death benefit. The benefit will go to a person you have specified.

To avoid heavy taxes, most beneficiaries of the death benefit choose to get it in one lump sum. However, there is the option of having this benefit paid out year on year. 

The downside to this type of insurance is that it can expire before you kick the bucket. These expiry dates often coincide with the end of mortgage payments or events like your children’s college graduation.

Choosing a Whole Life Insurance Plan

Whole life insurance plans are the most common among permanent life insurance options. The real draw of this type of coverage is that you have a guaranteed death benefit that will be paid out once you’ve gone.

The downside to this type of life insurance is it can cost you a lot. Younger people tend to benefit the most from this type of insurance, as they may assume they have a long life ahead of them.

Living Benefits Life Insurance

Living benefits life insurance allows you to access money from your policy in the event you become terminally or chronically ill. The idea is it can help you pay for medical expenses and other needs if you end up in such a situation.

Living benefits life insurance can be added to term and whole life insurance policies. You should know, though, that only long-term care options are available with a permanent life insurance policy.

The Main Types of Life Insurance

Now you should understand a little more about the types of life insurance on offer today. We added the living benefits life insurance into the equation as we think it’s worth consideration. 

For more helpful articles, check out our blog.

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