Welcome to Quotacy’s Q&A Friday where we answer your life insurance questions. Quotacy is an online life insurance broker where you can get life insurance on your terms. I’m Jeanna and I’m Natasha. Today’s question is: what are the different types of life insurance? Life insurance products are separated into two general categories: either temporary or permanent coverage. Temporary life insurance is called term life insurance. The most common types of permanent life insurance are whole life and universal life insurance. Term life insurance is designed to last a set period of time and end when you no longer need it. It’s the most affordable type of life insurance and can be adjusted to fit most budgets. Depending on your age, you can buy term life insurance that lasts anywhere from 5 to 40 years. Coverage amounts range from $50,000 to over $65 million. If you die within the active term period the insurer will pay this coverage amount, called a death benefit, to your beneficiaries. If you buy a term policy and later decide you’ll need more coverage, you can buy a new term policy, renew your current policy, or convert your term policy into a permanent one. Buying a new term policy is the most affordable route but you will need to go through underwriting again. This means your current health status will be reviewed. If you’ve developed a serious medical condition, such as cancer or a heart problem, then renewing your term policy for additional years or converting it is a better choice because you don’t need to go through underwriting again. Renewing your term policy increases your premiums exponentially so this option is only beneficial if you are now uninsurable and think you’ll only need coverage for a few more years. Being diagnosed with a terminal illness would be a good example of when renewing your term policy is a good option. Converting your term policy into a permanent policy also increases your premiums because you’re now paying for lifelong coverage versus the temporary coverage your term policy offered. When you convert a term policy, your age is a factor but not your health. So, if you have developed a health condition that would be a detriment in underwriting, but it’s not terminal, then converting your policy would be a good route to take. Well, we mentioned permanent life insurance now let’s dig a little bit deeper into the two main types: whole life and universal life. As far as permanent life insurance plans go whole life insurance is the least complex. As long as the policy is kept active, the life insurance company pays your beneficiaries the death benefit no matter when you die. Whole life insurance is typically about 10 to 15 times more expensive than its term life insurance counterpart. This is because of its lifelong coverage, savings component that builds cash value, and the potential to receive dividends. The cash value of a whole life insurance policy slowly grows over time and you can withdraw from it or take out loans against it. If you have what’s called a participating whole life insurance policy then you can receive dividends from the insurance company. These dividends can be taken as cash, used to reduce your premium payments, or used to buy more insurance coverage. Universal life insurance is more complicated than whole life insurance but more flexible as well. Universal life insurance is permanent. So, as long as you keep the policy active, the insurance company will pay your beneficiaries a death benefit when you die. A universal life insurance policy is designed to meet changes in a person’s life. It can be aggressively pre-funded, if you have the financial capabilities, and during times of tightened budgets premium payments can be reduced or suspended altogether. The death benefit can also be increased or decreased if needed. For most families, buying a term life insurance policy is the best option. Take the money you’re saving in premiums and then put that towards savings for the future. But as you’ve heard today, permanent life insurance has some pretty beneficial features too. Check out the link in the description below to read more more about the differences between term life insurance, whole life insurance, and universal life insurance. Thanks for watching. If you have any questions about life insurance make sure to leave us a comment. And if you’re ready to get quotes check out Quotacy.com. We’re here to help you find the best deal on the life insurance you want. Bye! Thanks for sticking around. We’d appreciate it if you Liked the video and hit that fancy little Subscribe button to see us every week. Bye!