There are a lot of different types of life insurance policies in Utah. Most people know the two most common types of life insurance policies, term life and whole life. We are going to dive deeper into the different types of life insurance policies available and what might be the best for you.
Term Life Policies In Utah
Term life insurance policies in Utah are probably the most popular types of life insurance policies available. Term life insurance is usually the cheapest type of life insurance policy that you can buy. The reason it is so cheap is because term life insurance only covers you for a term of time.
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The most popular terms are 10-year, 15-year, 20-year and 30-year. The lower the term the cheaper the policy is going to cost. For example, a $500,000 10-year term policy is going to be a lot cheaper than a $500,000 30-year term policy. When you buy a term life insurance policy, the premium is locked in for your term. So if it’s a 10-year term policy, the premium will stay the same for 10 years. If it’s a 30-year, the price will stay the same for the whole 30 years.
How long of term should you buy? There are a lot of factors that you need to consider when you’re thinking about how long of a term you should buy. If you only need coverage for seven or eight years, been a 10-year policy will be sufficient.
If you want to buy a policy to cover your mortgage and you have a 30-year mortgage, then you might want to consider a 30-year policy. Everyone’s situation is different, so it is important to evaluate your needs and how long you will need the protection.
Whole Life Policies in Utah
It’s pretty easy to understand whole life insurance. Whole life insurance covers you for your whole life. Unlike term insurance, that only covers you for a term of time, whole life insurance will cover you until the day you die.
Because whole life insurance will cover you no matter how long you live, it is the most expensive type of Life Insurance.
Whole life insurance has a key feature that term life insurance does not have. It has a savings component called “cash value”. Basically, the longer you have your whole life policy, the greater your cash value will be. Your cash value growth will depend mostly on the amount of premium you’re paying, the interest rate you are getting, and the amount of time you’ve had the policy. Most whole policies will have little to no cash value for the first 2 years of the policy.
So what can you do with the cash value? Technically, it is your money but there are definitely strings attached to it. There are basically two ways to access the cash value. You can borrow it, or surrender the policy.
If you want to keep your whole life insurance policy, but want to use the cash value, you have to borrow the cash value. With borrowing it, you’ll have to pay interest until you pay it back. If you don’t pay it back, it will continue to accrue interest and any unpaid amount will be deducted from your death benefit when you die.
If you cancel the policy, any cash value in your policy will be yours, this is called the surrender value.
A lot of people buy whole life insurance because they want to be sure there is a benefit there when they die. A lot of people will buy a whole life insurance policy for estate planning and others will buy it just to cover their final expenses such as funeral costs, unpaid bills, medical bills, and transition costs for their spouse or loved ones.
Universal Life Policies in Utah
Universal life insurance is kind of a hybrid between whole life and term life. It gives you the ability to be more flexible with the premiums you pay and also gives you more options for your cash value to grow.
There are Variable universal life policies in Utah where the cash value account is invested in other accounts like stocks, mutual funds, etc. There are also indexed universal life insurance plans in Utah that allow your cash value account to be tied to an index (like the S&P500 index) so it has the potential to grow more.
There are also Guaranteed Universal life insurance policies in Utah where the premium and death benefit are guaranteed, this is similar to a whole life policy. Universal Life insurance plans in Utah can be complicated, but we can go over them with you to see if it’s something that would be a good fit.
Accidental Death Life policies in Utah
Most of you have an accidental life insurance policy and you probably don’t know it. Most banks and credit unions will give you a small amount of accidental life insurance for free just for having an account with them. These policies will only pay out if you die in an accident. You can buy an accidental life insurance policy in Utah, and they can be pretty cheap in most cases (since they only pay out if it’s an accident).
A lot of the times, you will see these policies as an AD&D policy (accidental death and dismemberment). This means, it will pay an amount of money if you lose an arm, leg, etc, or if you die in an accident.
Simplified Issue Life policies in Utah
Simplified issue life insurance policies mean that you can get the life insurance policy with simplified underwriting. Usually this means that you don’t have to have a medical exam to get the policy.
There are simplified issue life insurance policies for whole life, term life, and variable life. With simplified life insurance policies in Utah, you are usually limited on the amount of coverage you can get. Also, you will more than likely pay more premium for a simplified issue life insurance policy than a fully underwritten policy.
Guaranteed Issue life policies in Utah
A Guaranteed issue life insurance policy is a life insurance policy that you can get without answering any health questions at all. They guarantee they will issue you the policy no matter how bad your health is.
These types of policies are highly marketed through the mail and on TV. There is a catch, with these types of policies, there is a waiting period. Most of these types of guaranteed issue life insurance policies in Utah will have a two-year waiting period. Meaning, that if you die in the first two years of having the policy, they will not pay the full death benefit. They will only pay you the premiums that you’ve paid into the policy plus a small percentage.
Guaranteed Issue life insurance plans are the most expensive types of policies and are your last option if you can’t qualify for any other life insurance that has an immediate death benefit.
Final Expense Life policies in Utah
Final expense life insurance policies in Utah are a type of whole life insurance policy. They are designed to help cover your final expenses. This normally would include funeral costs, unpaid bills, or any other type of expense that comes up when you die.
They are usually simplified issue, meaning there are usually just a few health questions that you have to answer. These types of policies are usually targeted toward people ages 50-85 and can range in coverage anywhere from $1,000 to $50,000.
Group Life policies in Utah
Group life insurance is a benefit you get through work. Group life insurance is usually term insurance. Group life insurance usually has limits on how much you can get and depending on your health, can be more expensive than an individual policy. Group life insurance is usually not portable, which means you cannot take it with you when you leave work.
Never rely solely on your life insurance through work as your only life insurance. There are too many things that can go wrong and leave you without life insurance.
These are some of the different types of life insurance policies in Utah. Everybody’s situation and needs are different so let us guide you through the different types of polices to see which one is right for you.
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