Life Insurance

What is Life insurance?

Making the decision to purchase life insurance is a wise investment for your family’s future. Life insurance provides you with peace of mind, and it provides financial security to your family in the event of your death. If you purchase a policy, you, as “the insured,” make premium payments into a policy over time, and when you pass away, the insurance company pays a “death benefit” to your beneficiaries to help them recover from any financial losses. There are many types of life insurance policies for different needs.

Term Life Insurance
The two main divisions of life insurance are term and permanent. Term life insurance is life insurance with a time limit. Term policies promise a payout to beneficiaries if the insured dies during a set period of time, usually 10-30 years. The insured makes regular premium payments during the coverage period. If he or she dies during the term, the policy pays out a predetermined lump sum to the beneficiaries. If the insured does not die before the term ends, he or she may be able to purchase continued coverage, but usually at a much higher rate. Term life insurance policies are more affordable than permanent solutions, but it’s important to carefully look at how long of a term you think you will need before choosing this type of policy.

Permanent Life Insurance
Permanent life insurance policies are – as their name implies – permanent. These policies pay out a death benefit regardless of when the policyholder dies. They are costlier than term life insurance policies but offer greater security.

There are some common types of permanent life insurance: universal, whole, and variable life insurance.

What does Life insurance cover?

Permanent Life Insurance
Permanent life insurance provides protection throughout your lifetime as long as you continue to pay your premiums in full. Most permanent life insurance policies build cash value for you to use for expenses later in life like paying off a student loan or purchasing a new car. Cash value is an attractive part of many permanent life insurance plans.

Term Life Insurance
Term life insurance provides you protection for a specific price over a specified period of time: usually 10, 15, 20, or 30 years. Coverage expires without value at the end of the term and you will need to either convert your policy to a permanent life insurance plan or purchase a new policy for a new term. Term life insurance pays out a specified lump sum to a beneficiary only in the event that you die before the policy expires. Term life insurance is somewhat less expensive than permanent life insurance due to the drawback of having an expiration date.

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