When most people think of life insurance, they think of a basic policy that will pay out in the event of their death. However, there are actually two main types of life insurance policies available, both with their own set of features and benefits. In this blog post, Anthony Pellegrino walks you through the two main types of life insurance policies so you can decide which one is right for you.
Anthony Pellegrino Lists The Types of Life Insurance Policies
There are two main types of life insurance policies: term and whole life.
Term Life Insurance
Term life insurance is a life insurance policy that provides coverage for a specific period of time, usually 10, 20, or 30 years. If the insured dies during that time frame, the beneficiaries will receive a death benefit, says Anthony Pellegrino. If the policyholder does not die during that time frame, the policy expires, and there is no death benefit paid out.
Term life insurance is the most basic and affordable type of life insurance. It is ideal for people who need coverage for a specific period of time, such as when they are starting a family or paying off a mortgage.
Decreasing term and level term are the two main types of term life insurance. Level-term life insurance provides coverage for a set period of time at a fixed rate. Decreasing term life insurance provides coverage for a set period of time, but the death benefit decreases over time.
Term life insurance is generally less expensive than other types of life insurance, such as whole life insurance. This is because it does not build cash value and is only in force for a specific period of time.
Many people choose to purchase term life insurance with a conversion option. This allows the policyholder to convert the policy to a permanent life insurance policy, such as whole life or universal life, without having to undergo a medical exam.
Term life insurance can be a great way to provide financial protection for your loved ones in the event of your death. It is important to shop around and compare different policies before you decide which one is right for you.
Whole Life Insurance
Whole life insurance is a type of permanent life insurance that provides coverage for the policyholder’s entire life. The death benefit is paid out to the beneficiary named in the policy, regardless of when the policyholder dies.
Whole life insurance policies also have a cash value component, which grows over time and can be accessed by the policyholder through loans or withdrawals. This cash value can be used for financial goals, according to Anthony Pellegrino, such as supplementing retirement income or paying for college expenses.
Premiums for whole life insurance are typically higher than those for term life insurance, but the coverage is lifelong, and the cash value grows over time. Whole life insurance can be a good choice for people who want lifelong protection and the ability to build cash value.
Anthony Pellegrino’s Concluding Thoughts
When considering a whole life insurance policy, it’s important to understand how the cash value works and what fees and charges may apply. Anthony Pellegrino recommends making sure to compare policies from different insurers to find one that best meets your needs.