Illinois residents need to be aware that there are several types of life insurance. There are cheaper policies, but there are also more expensive ones that offer different benefits. As described below, life insurance policies are divided into two categories: Term and permanent.
1. Term Life Insurance Policies are the cheapest of all the life policies. It is basically a contract that lasts for a set period of time, in which the insurer agrees to pay out the full amount of the policy should the insured die before the term expires. If the insurance period expires prior to the policyholder, then there will be no payout.
2. Permanent Insurance: There is a wide variety of permanent insurance. Each has its own unique investment options. We’ll explain the three main types below.
These policies also pay dividends. Cash accrual can be attractive because it allows borrowing on the value of a policy.
3. Universal: This policy is a bit more flexible compared to the whole life policy, as the policyholder has more control over how much they pay each month.
These policies cost more than the traditional entire life insurance policy, because a portion of the premium goes to increase the value of it. These policies are for a set period of time, or until a policyholder reaches an age limit. If the term policy expires prior to the insured, unlike term policies, the insurer will pay the full value of the policy.
Illinois residents should compare policies of the same type when comparing low-cost life insurance. It’s like comparing apples and oranges to compare a whole life investment option policy with a term insurance policy.