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Renewable Life Insurance
The world of life insurance is complex. It can be difficult trying to wade through all the varieties offered. Are the days long gone when someone could simply pay a premium in return for a life insurance policy that would pay a death benefit to the named beneficiary at the appropriate time? Nowadays, a person has to decide whether or not they want policies that build cash value, what kind of commissions and management fees will be assessed for that growing cash value, and a number of options that truly make the world of life insurance hard to understand.
Permanent Life Insurance
In the world of life insurance, there are two basic options: Temporary or Permanent. With permanent life insurance, the basic premise is that the coverage lasts for your entire life and there are three general varieties:
- Whole life insurance
- Universal life insurance
- Variable life insurance
Whole Life Insurance
With whole life insurance, the basic idea is that you have a fixed premium that will cover you for your entire lifetime. There is also a cash component where the policy builds value over and above the cost of maintaining the insurance coverage. Whole life insurance offers peace of mind because the premium amount remains fixed along with the coverage—and, the company guarantees a certain return but this varies by company. Unfortunately, whole coverage tends to be very expensive while renewable life insurance is typically much less expensive.
Universal and Variable Life Insurance
Universal and variable life insurance are simply variations on whole coverage but they tend to allow for more control and variable premiums in some cases. They are also intended to be permanent life insurance but the cash value and premium amounts can fluctuate so they are less expensive but can be riskier than whole coverage.
Renewable Life Insurance
A renewable life insurance policy, on the other hand, is a form of term coverage. With term life insurance, the insurer determines the amount of coverage and the amount of time that the policy is needed. The insurance company will determine a price for the coverage based upon a number of variables, including:
- Family/Personal Medical History
- Marital Status
Other factors will be analyzed before a quote is returned but it may be necessary to have a physical or doctor’s exam before a policy will be issued. Renewable life insurance policies are fairly inexpensive to purchase when younger and rarely require a physical. However, as a person nears fifty, renewable life insurance may become more difficult to acquire without first taking a physical. Because it is common for many renewable life insurance policies to be issued in blocks of 10, 20, or 30 years—it is almost impossible to obtain short term coverage once a person reaches 65.
Choosing a Policy
One of the true benefits of whole life insurance is that the coverage lasts throughout a lifetime so long as the premium payments are made. However, for people not looking for a complicated insurance policy with options concerning cash value—or, for anyone simply looking to purchase some life insurance to help secure the financial future of their loved ones—renewable life insurance can be a relatively inexpensive option providing the peace of mind that only comes from knowing that protection is in place if something tragic should ever happen.
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