There are many flavors of life insurance for you to choose from, but which ever you choose, you will be making certain that your loved ones will not be left with an overpowering financial burden after your death.
Life insurance can provide your family with a legal means to transfer your assets, much like the use of a will. It can give your family the ability to pay for education costs, pay off the mortgage, or simply help to maintain your family’s level of comfort with minimal financial disruptions. It can reduce the stress from compounding grief with financial devastation.
A life insurance policy can be personally customized, with the help of your insurance agent, to fit your requirements.
Here are some types of life insurance to consider:
Term life insurance is the most basic form of insurance, as it is a “pure insurance”. This insurance has only one function; it pays out a specified lump sum upon your death, should your death occur during the period for which you are insured.. This specific lump sum payment goes directly to whomever you left it. Your death benefit and policy limit will be the same under this specific life insurance plan. A $300,000 policy will pay out $300,000 death benefit. It has no investment value, no cash value beyond the death benefit. Also, if your term was 10 years it expire in 10 years. Ten years and one day into the plan, it will have zero value.
With Whole Life Insurance you basically get to protect for your family, while simultaneously, build up a cash value account. Your premium will be larger that that of a term life plan because, part of your premium is an investment. Your insurance provider will be in charge of managing those limited risk investments. Whole life insurance pays a death benefit to your beneficiary while providing you with a low risk cash value account with tax-deferred cash build up. Your premium is fixed and does not go up as long as you continue to pay. Whole life policies, often offer an option for you to receive dividends from your policy, or to use those dividends to reduce your payments. Whole life plans also enable you to withdraw the cash value within your lifetime, or use it to borrow against.
Variable Life Insurance is for the riskier individual. This insurance gives you permanent protection with more account flexibility. Your beneficiary gets a death benefit and you get a low-risk, tax-free cash build up. With variable life, your death benefit will vary relative to the existing cash value of the account, As in a whole life policy, variable plans allow you to borrow from it while you are alive.
Universal Life Insurance is one of the most flexible insurance policies. This also gives you a tax-deferred, low-risk cash return. You can borrow from your cash amount while still living, as receive interest on your balance. With this type coverage, you have the benefit of premium flexibility including the ability to pay more frequently, pay a lower premium for a limited amount of time, or skip premium payments should you need to.