Insurance and Finance

Your Guide to Different Types of Life Insurance

By Abi Grise Morgan 12.6.21

Life insurance: It’s the one type of coverage everyone is guaranteed to need some time, but it’s often overlooked. Jake Scott, a Texas Farm Bureau Insurance Agent in Rockwall, encourages his policyholders to find the right coverage for their families sooner rather than later. Not only is it always good to be prepared, but planning early also comes with benefits, such as accrued interest over time.

A common misconception is that life insurance only offers a payout in the event of your untimely death. But there are many coverage opportunities, including funds that help ease (or eradicate) any burden to your family if you need significant end-of-life care.

Unsure where to start? We talked to Scott to understand the different types of life insurance available to policyholders and how they can help.

Coverage for Your Family After Your Death

Whole Life
This policy offers coverage until you reach age 100. Young and healthy with decades ahead of you? This policy may give you the biggest return on investment, because a part of your premium earns cash value and dividends invested by Texas Farm Bureau Insurance on your behalf. The longer you hold the policy, the bigger the payout, thanks to compound interest. Plus, Scott points out that for policyholders who apply when they’re young, “It’s never going to be easier to get approved!”

Term Life
This policy expires after a set 10, 20, or 30 years. It offers a lower premium than a whole life policy but doesn’t accrue interest. This policy is great for parents paying for their kids’ college tuition or finishing out their mortgage. The cash benefit can eliminate or reduce the burden of that debt being passed on to the family with your estate.

“People will tell me that they don’t need a term life policy because they have life insurance through work — but it may not be enough,” Scott says. “And you don’t want any gaps in life insurance while you’re between jobs.”

Convertible Life
As you age, your family and life insurance needs change over time. A convertible life policy can transition an existing term life policy into a whole life policy.

Coverage for You and Your Family During and After Your Life

Individual Retirement Account (IRA)
When you think of different types of life insurance, IRAs may not typically come to mind — but if you’re under 70 years old, they’re a great option to consider. Before you hit 70, you can make tax-free contributions to either a Roth IRA or a traditional IRA. You receive a steady payout upon retirement, and your family will inherit the IRA after your passing.

“This is a great option for small-business owners,” Scott adds. Don’t wait until your business is well-established to invest in your own retirement. Your Agent will help you determine which account is best for you.

Speaking of retirement, you don’t have to stop contributing after you’ve maxed out your 401(k). With annuities, you make a lump-sum contribution into either a fixed-rate or a variable account. Fixed rates guarantee a minimum return for either a specified duration or the life of the insured. With a variable annuity, the amount fluctuates according to earnings generated. Annuities assure that you won’t outlive your income, even if you’re fortunate enough to live a long time.

Long-Term Care
End-of-life care can get expensive quickly. Long-term care policies ease the potential burden on your family to pay for around-the-clock care, housing, and medical expenses.

While it’s impossible to know what the future holds, a well-designed policy can protect you and your loved ones from financial hardships that arise as you age. Contact your Texas Farm Bureau Insurance Agent to make a plan so you can get back to living with the peace of mind that you and your family are protected, no matter what.

For more information on which type of life insurance might be right for you, read an Agent’s answers to some frequently asked questions.

Coverage and discounts are subject to qualifications and policy terms and may vary by situation. © 2021 Texas Farm Bureau Insurance