When we are talking about life insurance, what you probably think of this…
You buy a policy. You pay for the out-of-pocket expenses. And once you pass away, your beneficiaries will get what you invested. But that is just the tip of the iceberg in life insurance.
There is much to know about life insurance. For example, there are two main life insurance policies: permanent life insurance and term life insurance.
Under those two types of insurance are subtypes that many people are not aware of. One of which is known as straight life insurance.
Below you’ll find out what is straight life insurance and an overview of the key features about this type of policy.
What Is Straight Life Insurance?
A straight life insurance is a type of policy that provides a lifetime’s worth of coverage for you and your loved ones. The premiums in this type of life insurance coverage are stable, meaning they do not change at all over time.
It is also known as whole life insurance or ordinary life insurance. Since your coverage does not have a set period and it lasts a lifetime, it is considered a permanent life insurance.
While the premiums of other subtypes of permanent life insurance change over time (such as with an adjustable life policy) straight life insurance does not. As stated earlier, their premiums stay the same way as when you have bought the policy.
How This Type Of Policy Works
As it is with permanent life, straight life insurance policies also have cash value. Cash value is still different from the death benefit.
The cash value is an investment account in your permanent life insurance policy. Each month you pay your premiums, a portion of that goes to your cash-value account.
And the rest of the premium that you pay for will go to the company providing you with life insurance. Because it is an investment, the cash value account will grow according to a guaranteed rate as time passes by.
Pros and Cons of Straight Life Insurance
Like with many things, a straight life insurance policy has its own advantages and disadvantages. Here we will tell you the advantages and disadvantages.
What makes this type of policy shine over term life insurance is that it does not have a set period when it will end. The death benefit will be passed onto your beneficiary once you pass away.
And unlike term life insurance, it has that nice added cash value. So it is beneficial to have an additional investment account in your permanent life insurance.
However, one disadvantage of a straight life policy is that it is usually more expensive. You pay more for it because of the additional feature it includes.
So, in conclusion, a straight life insurance is just a basic type of permanent life insurance. It has a cash value like other life insurance policies.
To add to that, the amount of premiums that you pay for will not change as time passes by, unlike other permanent life insurance policies.
If you want to find out more about this type of policy, we recommend talking to a life insurance agent. They’ll be able to give you the details you need to make a smart decision about what type of policy works best for you.
