Life Insurance is an important part of any financial plan. Life Insurance plans are designed to provide for your family’s financial security after you die and can be use to replace the lost income that you would have earned, pay off debts, and provide for your loved ones future.
Types of life insurance can be explained and divided into many categories. I am going to start with the two most basic: Temporary (Term) Life Insurance and Permanent Life Insurance.
Term Life Insurance provides coverage for a set period of time, does not accumulate cash value, and often pays the highest amounts for your premium. Term insurance is often considered “pure” where the policy pays only in the event of death. The key factors to determine if term insurance is right for you are the face value of the policy (the amount received by relatives), the premium (the amount paid for the policy) and the length of coverage.
With term insurance, if the insured individual dies before the term ended date, the insurance is paid. If the insured dies after the term end date, he or she is no longer covered, and the policy no longer pays.
To provide continues coverage for individuals who decide that term life is right for them, insurance companies created “annual renewable term” life insurance. This kind of insurance is generally a one year policy that the insurance company guarantees it will renew with a policy equal to or less than the face amount of the original policy. Premiums for this policy are based solely on the individual’s age at the time of renewal, regardless of the insured individual’s health.
Permanent Life Insurance provides continues coverage until the policy pays out (usually at the time of death). Permanent policies accumulate cash values that reduce the amount of money that an insurance company will have to pay. Owners can often access the cash value of a policy by withdrawing money (while still keeping the policy), borrowing money against the cash value, or “surrendering” the insurance and receiving cash equal to the surrender value.
Types of Permanent Life Insurance policies include: Whole Life Insurance, Universal Life Insurance, Variable Universal Life Insurance and Endowment Insurance.
Please click a link below to find out more about these kinds of insurance:
- Whole Life Insurance
- Universal Life Insurance
- Variable Universal Life Insurance
- Endowment Insurance
If you would like to learn more about term or permanent life insurance and how it can protect your family, please feel free to contact me to set up an appointment.
