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Westend61/Getty Images August 30, 2022 Lizzie Nealon is an insurance contributor for Bankrate and enjoys making home, auto and life insurance digestible for readers so they can prepare for the future. Angelica Leicht is an insurance editor on the Bankrate team. She is truly passionate about helping readers make well-informed decisions for their wallets, whether the goal is to find the right comprehensive auto policy or the best life insurance policy for their needs. Bankrate logo The Bankrate promise
At Bankrate, we strive to help you make smarter financial decisions. To help readers understand how insurance affects their finances, we have licensed insurance professionals on staff who have spent a combined 47 years in the auto, home and life insurance industries. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation of how we make money. Our content is backed by LLC, a licensed entity (NPN: 19966249). For more information, please see our Insurance Disclosure. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our insurance team is composed of agents, data analysts, and customers like you. They focus on the points consumers care about most — price, customer service, policy features and savings opportunities — so you can feel confident about which provider is right for you. We guide you throughout your search and help you understand your coverage options. We provide up-to-date, reliable market information to help you make confident decisions. We reduce industry jargon so you get the clearest form of information possible. All providers discussed on our site are vetted based on the value they provide. And we constantly review our criteria to ensure we’re putting accuracy first. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Bankrate logo Insurance Disclosure
Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in . Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. Life insurance can be an excellent way to leave a financial safety net for your loved ones when you pass away. Your family’s budget may include your income, and hardship could ensue if that income is no longer available. This is where life insurance can help. This advertising widget is powered by HomeInsurance.com, a licensed insurance producer (NPN: 8781838) and a corporate affiliate of Bankrate. The offers and clickable links that appear on this advertisement are from companies that compensate Homeinsurance.com LLC in different ways. The compensation received and other factors, such as your location, may impact what ads and links appear, and how, where, and in what order they appear. While we seek to provide a wide range of offers, we do not include every product or service that may be available to you as a consumer. We strive to keep our information accurate and up-to-date, but some information may not be current. Your actual offer terms from an advertiser may be different than the offer terms on this widget. All offers may be subject to additional terms and conditions of the advertiser. Compare life insurance providers quickly and easily
See which provider is right for you. The amount of coverage you need depends on many factors, including your age, income, mortgage and other debts and anticipated funeral expenses. Whole life insurance combines life insurance with an investment component. Coverage for life Tax-deferred savings benefit if premiums are paid 3 variations of permanent insurance: whole life, universal life and variable life include investment component Term life insurance is precisely what the name implies: an insurance policy that is good for a specific term of time. Fixed premium over term No savings benefits Outliving policy or policy cancellation results in no money back Find matches Powered by HomeInsurance.com (NPN: 8781838) This advertising widget is powered by HomeInsurance.com, a licensed insurance producer (NPN: 8781838) and a corporate affiliate of Bankrate. HomeInsurance.com LLC services are only available in states where it is licensed and insurance coverage through HomeInsurance.com may not be available in all states. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way. Bankrate Why Lemonade? It's a fresh twist on life insurance: easy, accessible and affordable. See more providers in Choose from insurers in Show More comes in a few different forms, so choosing the right policy for you and your family can be confusing. Bankrate has broken down the different types of life insurance to help you make an informed decision about your next policy. Different types of life insurance
There are two main types of life insurance available, as well as some additional, more specialized options: Whole life insurance Term life insurance Other types of life insurance Term life insurance
is typically much more affordable than permanent life insurance because it is only active within a set period and does not generate any cash value. Some types of term life insurance also maintain constant premiums throughout the policy’s life. Despite the comparatively cheap premiums associated with term life insurance, there are a couple of drawbacks. For one, there is no savings component with term life policies. A savings or cash value component enables policyholders to add value to their policy over the course of their premium payments to cover extra expenses before death. If you decide you’d like access to a saving component, you’ll need to consider a permanent insurance policy. Another issue with term life insurance is that it only covers the policyholder’s beneficiaries for a set period. If a but dies 11 years after purchasing the policy, no death benefit is paid. If a policyholder outlives the term of their policy, they may have the option of renewing it for another term, converting the policy to a permanent insurance policy, such as whole life insurance or letting the policy end. You will have to ask your insurance agent if this option is available when initially purchasing the policy. The four primary life insurance types for a term policy are: Level term policies Yearly renewable term policies Return of premium policies Decreasing term Level term policies
A covers its policyholder for a set period and holds the death benefit and premium at a constant level. Because it gets increasingly expensive to cover a policyholder as they age, level term policies initially charge higher premiums to cover costs down the road. Yearly renewable term policies
Yearly renewable term policies have no specified term limit and enable policyholders to extend them year after year. This option makes premiums cheap initially but prohibitively expensive as the policyholder ages. Return of premium policies
Finally, policies charge the policyholder a fixed premium for the policy’s life and operate under a specific term period as other term policies do. Because many policyholders have found the vanishing death benefit component of traditional level term policies unfair, insurance providers have begun offering a return of premium option that refunds users their premium payments at the end of the policy. This option makes premium payments during the life of the policy considerably more expensive. Decreasing term
Decreasing term policies are unique in that the death benefit decreases in increments, usually year-by-year. Decreasing term policies may be attractive to policyholders with children. As their children age and come closer to financial independence, the policyholder may not need as high of a death benefit. Learn more: Whole life insurance
is a form of . The agreed-upon death benefit is paid out to beneficiaries in exchange for a constant, regularly-paid premium paid by the policyholder over the policy’s life. Whole life insurance also invests the money of the policyholder while they are still paying premiums. This investment serves as a savings account from which the policyholder can withdraw or borrow funds for various expenses. The premiums for whole life insurance policies are generally much higher than those on other life insurance policies, but they come with a few benefits. For one, the premium level never changes. Another plus is that the policy never expires. As long as the premiums are paid, it remains active and will pay out the death benefit to the policyholder’s beneficiaries when the policyholder dies. There are two primary types of whole life insurance: Traditional whole life insurance Variable whole life insurance Traditional whole life insurance
The premium and death benefit never change with traditional whole life insurance. Providers achieve this by setting the premium level at an amount that is initially excessive in relation to the benefits that the policyholder needs. As the policyholder ages, the cost per $1,000 of benefits increases and ultimately evens out. All the while, insurance providers invest a policyholder’s premium payments and use the earnings to pay life insurance costs for older policyholders. Variable whole life insurance
is a permanent insurance policy that combines a death benefit with a savings account, giving users the option to invest in various money markets to increase their policy’s value. It can be a riskier option because policyholders effectively tie the value of their death benefits to the performance of whatever market in which their money is invested. Learn more: Other types of life insurance
While term and whole life insurance are the broadest types of life insurance, other types of policies expand on permanent insurance coverage. They include: Simplified issue life insurance Universal life insurance
Universal or adjustable life insurance adds an element of flexibility by allowing policyholders to increase the death benefit and adjust premium payments on their policy if there’s enough money in the account to cover costs. Though this is useful if a policyholder’s economic circumstances change, the policy could lapse, and their life insurance coverage could end if the money in the account is used up. Simplified issue life insurance
While many life insurance providers require that policy applicants undergo a medical exam so that the insurer can adequately assess their risk of death, a simplified issue policy allows applicants to skip the exam. Instead, policyholders fill out a health questionnaire and report any habits they have that might increase their likelihood of dying. The drawback to this option is that the premiums tend to be more expensive because there are no medical exams. Guaranteed issue life insurance
A guaranteed issue life insurance policy allows users to apply without taking a medical exam or answering health questionnaires. This option is particularly advantageous for elderly applicants whose health condition would make it prohibitively expensive to be insured, but it is less attractive to younger, healthier users. Final expense insurance
A final expense policy covers the cost of anything associated with the policyholder’s death, including funerals, medical costs, cremations and more, up to the policy’s limits. The in the United States is $7,640, which means that end-of-life expenses can leave families scrambling financially in their time of grieving. Generally, this kind of life insurance is only issued to users of a certain age. It is especially useful for people who may have outlasted their term policies and have no other way to cover the cost of their death. Coverage limits for final expense insurance are typically lower than many other types of life insurance. Life insurance for babies toddlers and children
Life insurance is available for infants and children, but unlike traditional whole life and term policies for adults, the death benefit usually isn’t the main focus. Purchasing life insurance for your child may give them guaranteed insurability in the future, which could be vital if your child should later be affected by disease or illness. Life insurance for your child can also act as an investment vehicle if it is a permanent policy. Later in life, they may be able to borrow money against the of their policy. Life insurance for seniors
This policy’s low death benefit, generally less than $20,000, is meant to cover funeral or burial expenses for people 50 to 80 years old. The benefit may be limited in the first two years, but the policyholder may not have to participate in medical exams or answer health questions. Choosing the right type of life insurance policy
The many types of life insurance available can be overwhelming. When shopping for a policy, the first critical step is determining the ultimate goal. Another important question to ask may be for how long the insurance will be needed. If the policy is needed for a specific time, term life insurance is probably the most affordable. It might be a good idea for those who would like a lifelong financial planning tool to consider whole life insurance or one of the other types of more specialized coverages available. Frequently asked questions
How much life insurance do you need
Getting the right amount of life insurance is important to ensure that all financial needs are covered. Bankrate’s can offer a starting point to figure out the amount of life insurance needed. It is also a good idea to shop around and compare providers and then speak with a licensed insurance expert to make a final decision. Learn more:
What is the most popular type of life insurance
The two main types of life insurance that are most popular are term life and whole life. For term life, level term policies are among the most common. Level term policies are active for a set period of time and at a predetermined premium. Traditional whole life insurance is a popular permanent life insurance policy. Unlike term, permanent life insurance remains active until the policyholder dies (as long as premiums are paid). Like level term, the premium for whole life insurance remains constant. These premiums are then invested and can serve as a savings account for the insured to borrow from. This perk makes traditional whole life insurance generally more expensive than term. A licensed agent may be able to help you navigate the different types of life insurance policies.
How can I get inexpensive life insurance
Life insurance companies reward healthier policyholders by charging them lower life insurance premiums. If you are a smoker or overweight, you may pay more for life insurance than non-smokers or those with a normal BMI. Life insurance companies will also charge you more for insurance if you engage in risky hobbies like skydiving, bungee jumping or race car driving. Taking steps to live a healthier, safer lifestyle could help lower your life insurance premiums. Learn more: SHARE: Lizzie Nealon is an insurance contributor for Bankrate and enjoys making home, auto and life insurance digestible for readers so they can prepare for the future. Angelica Leicht is an insurance editor on the Bankrate team. She is truly passionate about helping readers make well-informed decisions for their wallets, whether the goal is to find the right comprehensive auto policy or the best life insurance policy for their needs.