When you purchase Alabama life insurance, you will have your choice among several different types of policies, including term, whole, and universal life. Read on to learn how these policies differ from one another.
Life insurance policies fall into one of two categories: term and permanent. In this section, we'll discuss term Alabama life insurance, which offers temporary protection for policyholders. Term life insurance policies are usually the most affordable life insurance coverage option, as they tend to have the lowest premiums. Some insurers also offer convertible term insurance, which gives policyholders the option to switch from term to permanent coverage at any time without having to undergo a medical exam. Convertible term policies allow you to upgrade your policy as your income grows in the future. Most term policies last for 10, 15, 20, or 30 years. At the end of this period, the policy will be worthless and must be renewed at higher premiums in order to maintain coverage.
Although more expensive than term coverage, whole Alabama life insurance provides coverage for the duration of the policyholder's life rather than just a limited term. The premiums of whole life policies are guaranteed for life as well, meaning they will not increase as you age. The death benefit and cash value of whole life policies are both guaranteed. Whole life policies accrue cash value on a tax-deferred basis, which allows them to double as an investment tool. Alabama whole life insurance also pays dividends that can be reinvested in the policy for additional growth.
Universal Alabama life insurance policies are a form of permanent coverage. The biggest selling point of universal life is its flexibility. Universal life policyholders have the ability to modify the death benefit and premiums of their coverage within limits. Depending on your cash-flow situation, you can adjust your universal life policy to concentrate on cash value growth or low premiums with guaranteed benefits. Some universal life policies also contain an option that allows policyholders to guarantee a monthly income for their beneficiaries' entire lives.
Variable coverage is also a form of permanent Alabama life insurance. Like universal coverage, variable life insurance allows the policyholder to adjust premiums and death benefits according to their changing lifestyles. A variable life policy can provide a lifetime of protection while giving policyholders the chance to invest the cash value in mutual funds. These funds invest in securities like stocks and bonds that can yield substantial returns over time.