Types of Life Insurance
Life insurance is considered the cornerstone of sound financial planning. A life insurance policy has multifaceted benefits that will protect you and your family from unexpected issues that may arise in the future as well as provide potential financial benefits. Life insurance is an easy way to protect your family or your business.
Types of Life Insurance
- Term Life - Perhaps the simplest form of life insurance, term life is designed to cover an individual for a designated period of time, often a relatively short period of time. With affordable premium rates, term life insurance provides level premiums for 5, 10, 20, and 30 year periods. Term life insurance does not offer a cash value, it only provides a death benefit. There are different types of term policies, such as level term, annual renewable term, and decreasing term insurance.
- Whole Life - Whole life insurance can remain in effect for the remainder of your life. This type of insurance will accumulate cash values as well as offer level premiums to policyholders. Because the premiums are level, the younger you are when you purchase your whole life policy, the less expensive the premiums will be. Whole life can be considered a long term financial strategy because it guarantees financial protection for you and your family. A whole life policy will also offer the potential for the policy to earn dividends.
- Universal Life- A universal life insurance policy can stay in force for the balance of your lifetime. It has options for both a cash value and a death benefit. The premiums can be level for the life of the policy. This type of policy is extremely flexible and can be structured to fit your needs. For example, you have the choice to accumulate cash in the policy or not. There are many riders to give you various options on these policies.
Life Insurance coverage can provide you with the following benefits:
- Replacement income for dependents. If you pass away, life insurance can replace your lost income to keep your family from financial ruin. For example, if you unexpectedly perish, leaving behind a spouse and young children, they will have financial security from your life insurance policy. This money will help cover any financial obligations you have left behind.
- Pay final expenses. Life insurance can cover funeral and burial costs, as well as final medical expenses and any debts you may have left.
- Create an inheritance for your heirs. You can name your loved ones as beneficiaries on your life insurance policy to create an inheritance for them if you pass away.
- Make charitable contributions. You can name a charity as the beneficiary of your life insurance policy. This contribution will be much larger than the cash equivalent donation.
- Create a source of savings and earnings. Some types of life insurance can be paid as cash value if the policy owner outlives the coverage term. As you pay your life insurance premiums, the payments will accrue interest over time. This cash benefit can be withdrawn or borrowed at the owner’s request.