Life Made Simple: Comparing Insurance Types | Allstate Insurance


Michelle:
Stephanie said term insurance was the cheapest… Ryan:
Yeah, but Michael said permanent was the way to go… They’re utterly confused and give wacky
explanations of what they think each policy offers. Michelle:
Isn’t Term insurance for when we, you know, set a certain term for our insurance
and— Ryan:
(totally B.S.) No, it’s when the terms are clearly defined based on your debt ratios
vs your return on the initial payment… and various other demographics. I don’t want
to bore you with technical terms. Michelle
(skeptical and slightly bewildered…but she keeps digging) Shouldn’t maybe we get permanent
then? Based on it being about permanence? Ryan:
(momentarily uncertain …) Maybe … Michelle:
Permanent insurance means you’re stuck with it no matter what happens, right? Ryan:
(with renewed bravado) No, it’s when the terms are permanently defined based on your
debt ratios vs your return on the initial payment… and various other demographics.
I don’t want to bore you with technical terms. Michelle:
(raises a skeptical eyebrow) It’s crazy how life insurance can seem so
confusing, yet be so essential to your family’s long term financial security. So let’s break
it down into a couple easy concepts. Life insurance is about protecting your family…making
sure they don’t fall on hard times when you die. Or leaving a legacy for your kids
or their kids. There are two major categories of life insurance:
Term and Permanent. Term life insurance is a good choice for younger
families who want affordable insurance for only a specific period of time. This time period, or term, is usually determined
by how long you plan to be working, the length of your mortgage, when your kids will graduate
college, or when certain debts will be paid off. With Term life insurance, you can protect
your loved ones from financial distress if you die. The monthly cost stays the same until
the end of the term. Then there’s Permanent life insurance. It’s
designed to cover a person for their entire lifetime. Permanent life insurance breaks
down into two different types: Whole Life and Universal Life. Whole Life insurance provides guaranteed coverage
and the payments are fixed, based on your age when you buy it. Whole Life insurance builds cash value that’s
guaranteed to increase. Like equity in a home, cash value can be borrowed or withdrawn if
you ever need it. And many Whole Life policies offer the opportunity
to earn even more – through dividends or other credits. Most policies allow these earnings to be taken
in cash, used to buy additional life insurance, or to help reduce the amount you might pay
out of pocket to fund the policy. Universal Life may be a good option if you
want lifelong coverage, but still want some flexibility down the road. It offers flexible payments and a variety
of choice in how aggressive you want cash value performance to be. Some policies offer greater potential for
cash value growth while others offer predictable returns. Term, Whole, and Universal Life Insurance
each offer options that fit individual needs. Michelle:
Get back to work, slacker… Ryan:
Huh!… Now I get it. Ryan :
Life insurance… I took some notes.

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