If you’ve never thought about life insurance much, you might assume that buying it is a fairly straightforward process. You choose a policy, pay your premiums and ideally, someday your family will get a payout. In fact, life insurance is a lot more complicated than this. There are different types that may be appropriate for you at different times in your life, and you may even want to sell it at some point.
How and Why to Sell
Before you take the plunge, it can be helpful to understand that life insurance is not necessarily for life. There are a number of reasons a person might decide to sell it, including not being able to pay the premiums or no longer needing the policy. For example, if you bought it to ensure your children were cared for and your children are now adults, you might not need to keep paying the premiums. You can take a look at a guide that gives you more information on selling your life insurance. You may receive a cash payout, and it just takes seconds to find out what the cash value of your policy is.
Term Life Insurance
This is purchased for a fixed time, which could be as short as one year or as long as 30 years. This can be cheaper than other types, and one of the advantages is that you can lock in a premium for decades. On the other hand, if it expires and you want another one, the premiums might be higher. One of the main drawbacks is that your beneficiaries do not get a payout if it comes to end during your lifetime.
Whole Life Insurance
This is the other most common type, and it is generally what most people think of when they consider buying life insurance—even though there are other types that may be more appropriate for their situation. You can keep it for a lifetime. It costs more than term, but most of the time, premiums do not increase substantially over the years. It can gain a lot of cash value over your lifetime.
There are many other types that have their own advantages and disadvantages. For example, universal is cheaper than whole, but it does not have any cash value. However, your premiums remain the same. Indexed universal does have a cash value, and it is linked to a stock market index. If you don’t enjoy monitoring your investments, this is not the right choice for you. There are also caps on investment. However, indexed universal can still become valuable. The value of variable and variable universal is also tied to investments, and you can withdraw or borrow against that value.
Some life insurance is for a specific purpose. For example, you can get life insurance that pays out the price of your mortgage to the lender. This might be useful to ensure that your family is able to remain in their home. If you are married, you may want to consider a joint plan. You could also be offered life insurance through your workplace. The cost of this is usually covered by your employer.