Choosing a life insurance policy can be an overwhelming process for anyone. No one wants to think about what will happen in the event of their death, but by choosing the right policy for you and your family, you can rest easier knowing they will be cared for.
Understanding the different policy options available is an important part of choosing the right policy. Let’s look at two major life insurance options, universal life and whole life policies, to better understand what the differences are.
Universal Life Policy
A universal life insurance policy allows the benefactor to have more flexibility and control over the amount of coverage they have, and the amount they pay into that coverage. A universal policy is a good option for those who may have fluctuations in their pay over time because it allows them to pay into their policy less should money become tight. This money can then come out of your accumulated cash value, or your payout amount. While this option offers more flexibility should your financial situation change, its biggest negative is that it does not have a fixed interest rate. This type of policy is at the mercy of the economy, so during a downturn when savings growth rates go down, your interest gained will go down as well.
Whole Life Policy
A whole life policy is different from a universal policy in that it has a set premium amount that is paid each month and the policy coverage lasts as long as you live. Whole life policies are a great option if you have a dependant, such as a spouse, who needs money to pay bills and survive should you pass away. These policies offer cash savings as well where you can save over time in a high yield savings account. Because of the higher, fixed premiums and the ability to save in a high yield savings account, these policies are best suited for younger people who will likely have many years to accumulate savings and pay off their premium.
Which is Better for Me?
Whether you choose whole life coverage or universal life coverage is a very personal decision based on many factors. To determine which is best for you, you’ll need to consider your age, health, career, marital status, and other factors. For younger people with stable careers and growing families, whole life policies are a great option. If, on the other hand, you have a more fluid career path, you may be better with a universal policy that can be adjusted should your income dramatically change.
Working with a Maryland Life Insurance Agent
Choosing a life insurance policy is a big decision, and working with a professional to decide which policy is best for you is a great way to ensure you get the coverage you need. At Freedom Insurance Agency, we are experts in our field and we would love to help you understand and decide between your various options.
For help choosing life insurance in Maryland call us at Freedom Insurance today!