Types of Life Insurance Best for Couples
Types of Life Insurance Best for Couples Once you have decided to buy a policy, the question becomes what kind of coverage to buy and how much life insurance you need.
Your decision generally depends on what financial obligations you want to implement, how long the obligations last, and how much you are going to spend.
1. Term Life Insurance
Term life insurance is suitable for many purposes. It promises to pay a set amount if it dies while the policy is in effect. You decide how much the payout will be and how long the life insurance should last.
You can match the length of the policy to your financial needs.
For example, if you want to make sure your income is replaced for 10 years when you die, you can buy a 10 -year term life policy in an amount that will match the income.
Term life is the most affordable life insurance option. However, there are several types of term life insurance:
- Renewable annual life insurance: This type usually occurs until you cancel your policy, or until a certain age. “With policies that can be renewed annually, your premiums are based on your age and health when the policy starts, but those premiums increase over time,” says Stokes. “Renewable annual term life insurance is usually the cheapest life insurance you can buy, although more expensive as you age.”
- Level term life insurance: Level term life insurance gives you more certainty about the cost of your premium, as it stays level for the length of your policy. “Often, term life insurance rates are sold in terms of ten years and 20 years,” he adds. “Once the term ends, you stop paying and don’t have coverage anymore.”
2. Permanent Life Insurance
Permanent life insurance lasts your entire life and builds cash value. It is suitable for people who want to provide money no matter when they die.
Permanent policies, such as whole life insurance, can work to cover things such as funeral costs or to give an inheritance. Also, you can take a loan against cash value while you are still alive.
Different periods of permanent life insurance include:
- Life insurance: This is the most straightforward form of permanent insurance, according to Stokes. You pay a fixed monthly or annual premium for guaranteed death benefits and coverage for the rest of your life — even after paying the premium. “Your cash value is guaranteed to grow and with annual dividends, it can grow faster,” she added.
- Universal life insurance: Universal life insurance allows you to build cash value but provides more flexibility in the amount you pay on your premiums and death benefit. “Your cash value is not guaranteed to grow, but you have the ability to accumulate more cash value because of the flexibility in premiums,” she says.
- Universal life insurance variables: This insurance gives you more control over your cash value by allowing you to locate it into a variety of market-driven subaccounts. “Like universal life insurance, the ability to receive more value for money because of premium flexibility as well as the investment performance of subaccounts,” said Stokes. “However, like regular market-based investments, your cash value can also go down.”
3. Survivorship Life Insurance
There is also a survival policy, which is a type of joint life insurance. They cover two people under one policy and are usually cheaper than buying a separate policy for each person.
This type of combined coverage can be set in one of two ways.
- Early death life insurance: It pays out upon the death of the first person. After that, the policy ends; it does not then extend to the surviving spouse. Survivors can use the money as a replacement for income, to pay off the mortgage balance, or to cover other debts. Note that this type of life insurance can be difficult to find because there are few that sell.
- Second life insurance for death: It pays off when both partners have died. It is commonly used by wealthy couples who want to ensure heirs, such as adult children, have the money to pay estate or inheritance taxes. Or it can work to fund the care of children who are living disabled when both parents die.
4. The benefit of accidental death
Some companies also offer the possibility to add riders, which can increase death profits.
Accidental death benefits provide an additional amount of money if your death was caused by an accident. A waiver of benefits for disability can help ensure your premiums are paid even if you can’t work.
Before you buy, shop around and get life insurance quotes from different providers. In general, term life insurance is sufficient for most families.
Your personal life and financial situation can change over time, so having coverage alone is the best