With life insurance, your family’s financial future is guaranteed. A death benefit will be paid to them after you’re gone. So, they can still live comfortably even in your absence. But what’s life insurance? How can you select the right insurance policy? And how much does it cost? Well, if those are the questions you need answers to, don’t go anywhere. This article provides a deeper insight into life insurance and how to make the best pick. Good luck!
Understanding the Basics
Life insurance typically refers to a contract that’s made between you and an insurance company. It involves you agreeing to pay a specific amount of premium in return for the insurer’s commitment to pay a set amount of cash to your family upon your death.
Essentially, the amount of money the insurer agrees to pay is referred to as the death benefit. And those who receive the money are called the beneficiaries.
Essentially, there are two common types of life insurance: permanent life and term life insurance.
Term life insurance: This type of coverage is often purchased for a specific period of time- 10 to 30 years. It comes with no cash values. And unless it’s convertible, it usually expires at the end of the term.
While term life insurance only offers one option, permanent life insurance usually comes with two options:
Whole life insurance: With this type of insurance, you’ll be required to pay a set premium. Your policy will remain valid as long as you continue paying the premiums. If you need permanent life coverage, whole life insurance has got you covered. It might accumulate cash value. So, in case you surrender the policy, the money might be returned to you.
Universal life insurance: This type offers investment options. Depending on your preference, premiums can be adjusted to allow you to manage your finances effectively. Remember, you don’t have to choose one specific type of life insurance policy. It might be an incredible financial option for you to combine universal life insurance and permanent life insurance since your needs might vary as you age.
Combination life insurance policies typically come with numerous options. It’s now becoming popular for people to purchase life insurance coverage that combines with other types of insurance, such as long-term care coverage.
With convertible life insurance policies, you can easily start off with a term life policy and then convert it into a whole life policy. This will prevent you from losing your policy at the end of the term. Plus, you won’t need to take a medical exam when making this transition. Permanent life insurance allows you to build significant savings through investments.
Are you looking for life insurance? Well, you don’t have to choose between different types of life insurance policies. Rather, you can choose to combine at least two options. This will go a long way in ensuring that you more coverage for less money. In fact, combination life policies are now a popular trend amongst various people.