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You started looking at Florida life insurance and I am willing to bet you ran into a series of terms that all seem to describe similar function but in different ways. Whole life, term life, universal life, all seem to say the same thing. If this was confusing to you then you are not alone. It feels like the people who made up all the different types of Florida life insurance policies are trying to confuse us.
Before we get started breaking down the different types of Florida life insurance let’s simplify the field just a little. There is term life insurance and then there is everything else. If you can get that down you have passed the first lesson of Florida insurance class.
Florida term life insurance is pretty easy to understand. You buy a life insurance policy with a set term on it, usually 20 to 30 years. That policy is for a set amount of insurance, we will say $500,000 for this example. You then pay a set monthly premium and if you do not die during that 20 to 30 year time period the insurance is done. That’s it! Simple I pay you, you cover me insurance. The premium does not change at all during the term for Florida term life insurance. It’s like a mortgage. It stays the same every month for the entire “term” of the policy.
Every other type of Florida life insurance is related. The way the policies work is a little different but each one has this in common; there is an insurance arm and an investment arm. So like Florida term life insurance you have insurance coverage, but you also have an investment, or “cash value”, that accrues over time and usually gets a small rate of interest. This all sounds great except the premiums on these types of Florida life insurance are much greater (many times more than five times greater) than Florida term life insurance. The extra expense is in the cash value that you accrue and the fees that you pay to have the insurance company manage the accounts. This is why Florida term life insurance is so much cheaper; there are no accounts to manage just insurance. These other types of Florida life insurance can be useful in very specific instances, but for the vast majority of Floridians Florida term life insurance is the best option. That way you can take the money you are not paying in premiums and invest it somewhere with much lower fees.
At TermLife360.com we love helping people make these types of Florida life insurance decisions. If you are ready to get some quotes fill out the form on the side of this page. If you have any questions or if there is any way we can serve you please contact us.