Reader’s Question:

I would like to get an idea of all the kinds of life insurance plans available before I decide to talk to a life insurance agent here in Illinois.

Oliver

Chicago, IL

It would be up to you, the consumer, to decide on the right kind of life insurance policy based on your goals and needs for the future and not necessarily just because you come across a policy there in Illinois that seems to be the cheapest one. Listed below are information regarding four major types of life insurance coverage and how they basically work.

Whole Life or Permanent Life Insurance
A life insurance policy that is meant to be maintained for the individuals whole lifetime. Death benefits are paid to the beneficiaries upon the demise of the insured. This kind of policy is much more expensive than most but is designed to accumulate cash value or interest over time and is tax-deferred.

Term Life Insurance
One of the more popular kinds of life insurance, this is the least expensive type of policy that is meant to provide coverage for a certain period of time only, usually ten or twenty years. Provides purely coverage only and does not earn cash value. Benefits are only paid if the insured dies within the coverage period.

Universal Life Insurance
Similar to Whole Life or Permanent life but premiums earn higher cash value and has flexible terms on death benefits.

Variable Life Insurance
Similar to Universal Life Insurance but policy holders are given more flexibility on where their premiums and cash value are invested and benefits terms are also very flexible.