Evaluating the advantages and disadvantages of these types of life insurance could help you decide.
When you’re thinking about what type of life insurance you should buy, it’s important to understand the basics, benefits, and realities of both term life and life insurance to make the decision that is best for you.
Term life insurance
The term insurance is the simplest type of insurance. You pay your premiums according to schedule, and in return, your insurer agrees to pay a death benefit if you die during that time.
The benefits of term life insurance
- Low initial cost. Term insurance can be purchased in bulk for relatively low premiums.
- You can make term insurance match your needs, just like life insurance . Many are concerned about paying off their mortgage, providing money for higher education, or replacing some of their income if they die. These are usually temporary needs that could last as little as a few years or much longer.
- Convertible. Most term policies can be converted to life policies (age-related limitations typically apply), if your temporary needs become life-long needs.
The reality of term life insurance
- The policy is temporary. Term insurance is designed to last for a specific period of time (term). After the term period ends, many policies are guaranteed to be renewable annually at a higher premium, and they could fetch prohibitive prices.
Lifetime insurance
The Lifetime Insurance provides a death benefit during your lifetime. It also includes a cash value component that builds in value over time, allowing you to borrow or withdraw funds as needed.
The benefits of life insurance
- Coverage for life. A life insurance policy covers the rest of your life, not just the established term. As long as your policy is in force when you die, your beneficiaries will receive a death benefit.
- Build net worth. Over time, a portion of the premiums you pay for a lifetime policy becomes part of the cash value of the policy. Once enough cash value has been build up, this cash value becomes available to you through loans and withdrawals. However you choose to use it — if you choose to do so — the cash value of a lifetime policy adds an additional asset to your family. There may be consequences when you dispose of the cash value, however, depending on the action you take and how you get the money. 1
- Premium options. With a traditional life insurance for parents policy, premiums are typically pay up to age 100, but there are policies with a limit of payment period where the premiums are payable in full in a specific number of years.
- You could receive dividends. The insurer could pay dividends to policyholders for life, depending on the financial performance of the company. Dividends can be paid in cash, accumulated at a competitive interest rate, used to purchase additional insurance within the policy, or even used to lower the premium. Although dividends are not guaranteed, the ability to earn dividends is an attractive feature of life insurance policies.
- Estate planning. It’s not just for the wealthy. Many people want to leave assets for the next generation, make charitable donations, or cover the expenses of an individual with special needs. Life insurance can be an efficient way to pass money on to the next generation.
The reality of life insurance
- Higher initial premiums. Life insurance has a higher initial premium than term insurance for the same amount, but don’t confuse cost with value. The benefits of lifetime coverage and, over time, the guaranteed cash value and eligibility to earn dividends, make lifetime insurance a good option to create an additional class of assets and to provide for lifelong necessities.
Good financial decisions are based on thorough research and good advice. If you are thinking about what term life insurance offers vs. insurance for life, be sure to discuss your options with a State Farm ® agent and consult with your tax and legal advisor about your situation.
Short-term vs long-term health insurance
To help you evaluate both ends of the spectrum, this article describes the benefits, length of coverage, and purpose of both short-term and long-term insurance options.
When choosing between a long-term and short-term health insurance plan, it is important to ask yourself two general questions:
How long will you need your insurance?
For periods of less than a year, a short-term plan may be ideal. The long – term plans offer coverage annually renewable, so you can keep the same plan over a period of time, but they tend to cost a bit more.
What would you like your insurance to cover?
If you have pre-existing conditions, plan to get pregnant, or want a more comprehensive plan , a long-term plan may be your best option. If you only need doctor visits and general coverage, the short-term insurance section below will be of more interest to you.
Short term insurance
Tip: Unlike the Major Medical Expense plan or long-term plans, short-term insurance also allows you to buy the exact number of days you need, but generally requires you to pay in advance for the period you need. coverage.
What it is
Often called travel insurance plans, short-term policies are specifically design to cover both travel and medical experiences for a period of one year or less. They allow you to choose your own policy maximum and deductible, allowing you to keep control of your coverage and price.
What it does and does not offer
Since you can generally only have coverage for one year, these plans will not cover you for long-term conditions, such as maternity, mental health, and pre-existing conditions. However, they will provide coverage for new illnesses or injuries during your trip. including doctor visits and hospitalizations..
Tip: Many short-term plans exclude coverage for pre-existing conditions – which means that if you develop a condition in your first plan you may not be covered if you buy a second short-term plan.
For whom it is
Since domestic plans typically do not cover medical expenses abroad, these plans work well for individuals and families traveling outside of their home country in search of blanket coverage. Frequent travelers also make great use of these plans, as associated travel benefits such as lost luggage or trip interruption are usually always included.
These plans also work well for students in short study abroad programs who do not need to meet strict insurance requirements. In some cases, short-term plans may be good options while you wait for long-term coverage through an employer or private company.
Costs and payment options
Short-term plans are typically non-renewable and offered on a daily rate, allowing the buyer to purchase coverage for the exact time period needed and helping to keep the total cost low. If you plan to travel to the United States and are under the age of 30 you can purchase a plan for as low as $ 38 per month .
Long term health insurance
What it is
Long-term insurance plans (often called major medical insurance ) are comprehensive, annually renewable options designed specifically for you to stay in the same plan for long periods of time. Since you will typically have a major medical plan for many years, these are medically assess – meaning you will have to answer health questions to ensure you qualify for coverage. Unlike travel plans, which allow you to choose your own policy maximum and deductible, long-term insurance coverage is often less flexible, but offers a higher policy maximum and additional benefits, such as preventive care.
For whom it is
Long-term international insurance plans work well for both individual expats and families who need coverage for at least a year. They also work well for international students , allowing them to maintain the same insurance plan throughout their studies. Anyone with pre-existing conditions or planning to get pregnant would also have interest in a long-term plan, as newborns are generally add to a plan automatically and pre-existing conditions are cover automatically or after a waiting period. .
Tip: Some long-term insurance plans offer additional options (for an additional cost) to cover maternity, dentistry, and optometry, which may not automatically be covered by the plan.
What it does and does not offer
Although these plans are more expensive, they provide many benefits that are not cover by short-term plans, such as coverage for pre-existing conditions, wellness visits, and preventive care. Of course, no insurance plan can cover all visits, but long-term options generally offer the most coverage.
Also read :Home Insurance: How it Works?
Costs and payment options
It’s no secret that healthcare within the United States is expensive, yet long-term international insurance plans don’t have to break the bank. Plans like our Global Medical option would cost a family of four (age 40,35,9,5) approximately $ 265 per month, while the same family needing coverage outside of the US, China, and Japan could expect to pay around $ 200 a month for the same coverage. Premium payments are also more flexible, allowing payments to be in monthly, semi-annually, quarterly, or annually.
To help you choose the best possible insurance plan, we have created a table to compare some of the most popular benefits of short-term and long-term insurance plans. Of course, whether you choose a short-term or long-term insurance plan, it is important to understand the terms of the policy and to contact a licensed insurance agent before purchasing.
