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View articleDid you know that there are different types of life insurance?
Here are the main ones:
There are five types of life insurance you may come across if you want to purchase one. These include term life insurance, permanent life insurance, universal life insurance, variable life insurance, and final expense life insurance.
If you are looking for life insurance in Puerto Rico, the right policy for you will depend on your personal circumstances, your particular needs, the amount of coverage you need, and your budget.
In this article we show you what the different types of insurance on the market are about, including information on how they work, their duration, and who they are best suited for.
Main Types of Life Insurance in Puerto Rico
Before deciding on one or the other, it is convenient to know the types of life insurance in depth, so we are going to explore each one of them:
Term Life Insurance
Term life insurance is quite popular for most people because it is simple, affordable, and only lasts as long as it is needed. It's one of the easiest and most affordable ways to provide a financial safety net for your loved ones.
It lasts for a set number of years before expiring. Policy premiums would be paid, and if you pass away during the policy period, the insurance company pays a set amount of money, known as the death benefit, to designated beneficiaries. The death benefit can be paid as a lump sum or annuity.
This type of insurance is more common among those looking for cheaper life insurance for up to 30 years or more.
Permanent Life Insurance
Permanent life insurance is top-rated because of its simplicity and lifetime duration. Its cash value—a tax-deferred savings account—earns interest at a fixed rate.
Whole or permanent life insurance has a guaranteed death benefit and a cash value that earns interest over time. A portion of the premium goes toward maintaining the insurance policy, and the rest goes toward the cash value account.
It is aimed at high net worth individuals who need to differentiate their investment portfolio and people with dependents who may need long-term care.
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View articleUniversal Life Insurance
Universal life insurance is a flexible permanent life insurance policy that allows you to reduce - or increase - the amount you pay in premiums. The difference is drawn from the policy's cash value if you decrease the premium amount.
A universal life insurance policy may be a good option if you are looking for flexibility in your life insurance and you can afford it. A universal policy is more expensive and complicated than a standard whole.
This type of insurance is perfect for people with high incomes trying to build a savings fund without entering a higher income level
Variable Life Insurance
Variable life insurance is a type of permanent coverage that allows your cash value money to be invested in various funds offered by the insurance company, including mutual funds.
Although variable life insurance has a minimum guaranteed death benefit, the amount of the cash value is not guaranteed and will depend on market conditions. You can earn more interest than with a permanent life insurance policy, which offers a fixed interest rate, However, as the policyholder, you'll bear the investment risk if the fund underperforms.
Variable life insurance offers the opportunity to invest the cash value in various funds offered by the insurance company, including mutual funds. The return on investment will reflect general market trends.
The profile of the people who purchase this insurance have high incomes and seek permanent coverage options to diversify their investment portfolio.
Final Expense Insurance
Final expense insurance, also known as burial insurance, is a type of life insurance designed to pay a small death benefit to your family to help cover end-of-life expenses. Unlike traditional life insurance, which is designed to replace decades of income, burial insurance is often suitable for seniors who want a smaller policy to cover their funeral expenses.
Unlike most traditional policies, which require a medical exam, you only have to answer a few questions to qualify for final expense insurance. In addition, the waiting period to obtain coverage is minimal or non-existent.
It's best for people with trouble qualifying for traditional coverage, such as the elderly and people with severe health conditions.
Which is the best on for you?
Taking out term life insurance is the cheapest option in the short term. However, while universal and participating life tend to be more expensive up front, the cash value growth potential of these types of policies could make them more profitable in the long run.
Do you want to take out life insurance and don't know which one?
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The contents in this section are provided for informational and educational purposes only and do not apply to all types of situations. The contents should not be construed as any type of advice or suggestion to take (or refrain from taking) any particular action, as it does not include or take into account all factors that may be relevant to your individual needs.