Life insurance what are the different types?

Question

I am a single mother and would like to get life insurance what are the differences? which one helps your credit?

Answer 1

There are two main types of life insurance. Each type has their own variation of it, but the idea are all the same.
Type 1: Cash value life insurance.
Also called: Whole life, variable life, universal life
What it do? Protects family in event of your death and also build cash value. You may borrow the cash value at any time and you will owe monthly interest on it.
Cost? Average cost for a $100,000 policy for a 30 year old is around $800/year.
What does your beneficiary get in case you die? Only the death benefit (minus any cash value taken out and any missed premiums). All cash value is kept by the insurance company and your family has no way of getting it.
Notes: These products are very expensive and you lose all cash value upon your death.

Type 2: Term insurance
Also called: Level term, increasing term, decreasing term.
What it do? Protects your family in event of your death.
Cost? Average cost for $100,000 policy for a 30 year old is $250/year.
What does your beneficiary get in case you die? Death benefit.
Notes: While they remain very affordable, they will get more expensive each time you renew it every 10, 15, 20, 25, or 30 years. Since they remain affordable at the beginning, this gives your more room to invest your money in a separate account (either an IRA, 401k, money markets, CDs, education accounts, etc).

Neither type will help your credit. It is insurance product, not a credit card or a loan that you have to pay back. If you don't pay your insurance, you will lose coverage, but it won't get reported on your credit history.

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Answer 2

Absolutely none of them helps your credit! Dont let anyone try to sell you on that! The only thing that helps/affects your credit are loans that you have. Life insurance helps your credit the same way that your grocery store does...not at all.

1st, you should sit down w/ an insurance professional & have themshow you the differences. But in a nutshell there are 2 basic types: whole & term. There are other variations of insurance like universal & variable, but we should keep it simple with just the 2 basics.

Term: aka pure life, is the cheapest of the 2 because there is no cash option (more on that later) comes in increments (may be different depending on the company) of years. Usually 5, 10, 15, 20, 25 or 30. Some even have year to year. The shorter the term, the more you can save in the short term because it is slightly cheaper. This is because it is less expensive to cover someone for 5 years than for 30. In order for this to pay off, you must die within the specified time. Other wise, you must renew the policy @ a higher rate, because you are now older, and you dont get back the money you put into it. But that may not matter, because you are saving so much on the cost difference.

Whole life: or cash value. Covers you as the name implies- whole life, so long as you pay the premium. This costs more than whole because of the cash value portion that allows you to borrow against it (with no effect on your credit) and helps keep the policy going in case you miss payments, by borrowing for you to make the payments. This is assuming that you have enough in cash value.

The cost difference is very large. So, if you are on a tight budget, go with term coverage. You will get much more bang for the buck. Just as an example: a 35yr old female in good health could get a $100k 25 yr term for about $13/mo. But in whole life, you could only get about $10k for the same amount.

Good luck! & talk with a good agent that a friend might recomend. Stay away from any policy that you dont understand redily. Sometimes a well intending agent can give you something you dont understand & if a change happens, you wont like it because you wont know why.

Answer 3

Life insurance really doesn't help or hurt your credit. As for the types of insurance, there are 2 basic types. One is Term Life. This type of policy is a bet with the insurance company on if you are going to die before the policy runs out, usually a period of 10 years. If you die, it pays, if you don't, they win and you get nothing for your money. The other is Whole Life. This type of policy allows you to build up a cash value that you can take loans against. If you don't pay the loan back, then on your death, the loan amount is deducted from the face value. Whole life polices, usually, do not have an expiration date.

Answer 4

It is hard to give a blanket answer when it comes to insurance. There are a dozen different uses for life insurance and depending on what it is you need it for. You need to consider what the money is intended to do for the beneficiaries when you die. You have kids, is this money intended to go to a family member who will care for your kids if something terrible happens? Or do you want it to pay for your kids' college? Do you want the money from the policy to pay for your funeral, or to pay debts you leave behind when you are gone? You need to consider these things because you must choose the amount the policy pays when you die, and how long the policy will last. Think carefully about these things write down the specific goals for this money. What kind of insurance you should be considering is based on this.
most common types of insurance are term and whole life. Term is affordable but will only cover you for a limited amount of time, and there are many variations. some of them give you back all the money you paid over the years if you do not die within a certain period of time. . Whole life is far more expensive than term, but it lasts until you die as long as you pay the premium every month until that happens. whole life comes in many forms as well.
The insurance company will base the price you pay per month on your policy based on the above as well as your profile, age, race, health risks, occupational hazards etc...
if you are looking to help your credit, insurance is not the most effective way to do it. you can purchase a whole life policy, which over time gains value. when it accumulates to a large sum it will be considered a sizable asset by credit issuers, who may give you more on a loan. I do not believe your credit score reflects assets you have in insurance, therefore it is unlikely your credit would be helped by insurance.
lastly be careful who you choose to buy the insurance from, the insurance company and the broker.

Answer 5

There are actually many types of life insurance. There are also many riders that you can add to a policy. Be sure to talk to a local agent to get the full picture. Here are some examples: Term, Universal, Variable Universal, Whole, Joint Life, 2nd To Die Life.

Answer 6

You've had the basic differences between term and whole life explained. One other thing: the whole life policy only doesn't expire if the policy is fully paid up. That normally take from 25-30 years to do.

Answer 7

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RE :Life insurance what are the different types?
I am a single mother and would like to get life insurance what are the differences? which one helps your credit?
Follow 8 answers

Answer 8

they wont help your credit, but down the road if you have 100k cash value in your insurance i would think that would help you get a loan if you need it

Answer 9

it can't help