Types of Life Insurance – Easy to Understand Reference Guide

Many life insurance companies specialize in offering different types of life insurance policies. It can also be difficult to know which life insurance company can offer you best types of life insurance for your unique planning needs.

Affordable Life USA helps individuals and business owner’s identify the perfect type of life insurance policy to compliment their overall financial plan.

We have streamlined the process of shopping for life insurance and monitor a network of many life insurance companies.

If you eventually choose to work with us, we promise to work diligently with you from start to finish to locate the appropriate type of life insurance plan for your needs and budget.

In the meantime, please dive right into our helpful reference guide on the various types of life insurance.

Types of Term Life Insurance

Basic Term Life Insurance

A term life insurance policy offers guaranteed death benefits and level premiums for an initial period such as 10, 15, 20, or even 30 years.

Term life insurance is an excellent choice for applicants looking to obtain the largest amount of insurance at the cheapest cost.

Term coverage can be tailored in duration to address needs such as protecting a mortgage, or protecting your income to your spouse.

Return of Premium Term (ROP)

This is type of term life insurance that guarantees the return of all of your premiums at the end of your term.

With Return of Premium Term, if you are still living at the end of the term period, 100% of your paid premiums are guaranteed to be returned to you tax free.

Depending on your age at the end of your term, this money can also be applied towards extending the duration of your coverage.

Mortgage Protection Term Life Insurance

These types of life insurance policies are sold by mortgage lenders and are often labeled either mortgage life insurance or mortgage protection life insurance. Mortgage life insurance pays off your mortgage upon your death.

With this type of life insurance the death benefit will be directly linked to the amount of your mortgage balance. The death benefit will decrease as your mortgage gets paid down.

Group “or” Company Term Life Insurance

One of the types of term life insurance offered by employers as a benefit to their employees. With a group life insurance policy, the insurance contract is between the group and the insurance company, with each employee receiving a certificate of coverage.

It is easy to qualify for this type of life insurance because there are no medical questions. Company insurance is often offered as a factor of your income, at no cost as part of your normal benefits package.

Many company sponsored plans also allow employees to purchase additional amounts of voluntary coverage at group rates. You will need to pay a premium for the additional coverage at the published group rate. Most additional coverage requires a brief questionnaire about your medical history and occasionally an exam.

Pension Maximization Life Insurance

Pension maximization using life insurance is often utilized by married couples to increase their net retirement income while still protecting the surviving spouse’s income in the event the retiree dies first.

First, the retiree elects a single life pension instead of one with a survivor benefit for their spouse.

Then, the retiree purchases life insurance to allow the surviving spouse to replace the pension income in the event that the pension recipient dies first.

Types of Permanent Life Insurance

Types of Permanent Life InsuranceHybrid Universal Life

Hybrid Universal Life is a type of permanent life insurance which can behaves similar to term coverage with the premium and death benefit guaranteed to a specific age (i.e. age 85, 90, or 100).

Hybrid universal life insurance builds very little cash value but, offers you the most affordable long term coverage. This competitively priced life insurance policy that is not sold by all life insurance companies.

Interest Sensitive Adjustable Life 

Interest Sensitive Life  is known as Flexible Premium Adjustable Life. Although still sold today, this type of life insurance was more popular a few decades ago. Interest Sensitive Adjustable Universal Life typically does not have guaranteed premiums.

When you contribute premiums, the insurance company deducts for expenses, including the cost of the death benefit, and the rest of the money stays in the policies cash value earning interest to help pay some of the future costs.

Unlike whole life’s guaranteed cash value, adjustable life insurance has a fluctuating interest rate on the money contributed towards the cash value.

Universal Life Insurance 

Universal Life Insurance is another type of permanent policy where the excess of premium payments above the current cost of insurance are credited to the cash value of the policy.

Universal life insurance can be designed for cash accumulation that acts similar to a savings account with tax deferred growth along with lifetime coverage.

Universal life can also be structured at competitive price point with no cash value with guaranteed coverage to last a lifetime.

Whole Life Insurance 

Whole Life Insurance is also known as Ordinary, Standard or Permanent life insurance.

Whole life is a type of life insurance which provides a fixed premiums and death benefit for the lifetime of the insured.As long as the required premiums are paid, this type of policy will remain in force for your whole life.

Whole life insurance policies also accumulate guaranteed tax-deferred  cash values,. These cash values are available upon surrender, or by taking withdrawals or loans against an active policy.

This type of permanent life insurance is more expensive and is designed to offer lifetime protection and is not sold by all life insurance companies.

Whole life is ideal for people looking to obtain a small policy to pay for final expenses, or for affluent people looking for a larger policy to create an estate for their family.

Survivorship Life Insurance

Many wealthy people use Survivorship Life Insurance, also known as “Second-to-die life insurance”and “joint survivor life insurance to protect their estate.

A survivorship life insurance policy is set up to insure married couples, and type of policy does not pay out until the surviving spouse dies.

Second-to-die life insurance allows couples with significant assets to pass them down to children and avoid having to sell off everything at fire-sale prices to pay federal estate taxes owed after both spouses die.

Life Insurance Quotes

Do you already have understanding of the types of life insurance?

Great, you can go ahead and jump right into some quotes!

Our agency would love the opportunity to work with you on your life insurance planning.

We specialize in assisting individuals and business owners find affordable life insurance.

Since, many companies sell life insurance, it is impossible for you to know which carriers offer the lowest prices.

Our instant life insurance premium calculator is a hassle free method to compare different types of life insurance.

You can easily compare term life, return of premium life, and permanent life insurance quotes in minutes.

If you need help determining the best option for your family, please do not hesitate to call us at 1-877-249-1358.

Eric Van Haaften, LUTCF is the president of Affordable Life USA. We are a nationally licensed life insurance agency focused on finding our clients custom planning solutions at excellent prices. 1-877-249-1358. eric@affordablelifeusa.com