Know Your Life Insurance Plans

Having life insurance is truly a selfless gesture. It protects families and loved ones in the case of an unforeseen event. Leaving an inheritance will help pay off debts and give others peace of mind. It’s easier to get approved for life insurance and lower payments when you’re young. So don’t put it off! Life insurance is something everyone should consider.

When you do start to look for life insurance plans it will help to know the different types of insurance and which one is best for your situation. When shopping around for plans be sure to do thorough research and consider your options.

Term Life Insurance

A policy with a set duration limit on the coverage period. Once the policy is expired, it is up to the policy owner to decide whether to renew the term life insurance policy or to let the coverage end. This type of insurance policy contrasts with permanent life insurance, in which duration extends until the policy owner reaches 100 years of age.

Permanent Life Insurance

An umbrella term for life insurance plans that do not expire (unlike term life insurance) and combine a death benefit with a savings portion. This savings portion can build a cash value – against which the policy owner can borrow funds, or in some instances, the owner can withdraw the cash value to help meet future goals, such as paying for a child’s college education. The two main types of permanent life insurance are whole and universal life insurance policies.

Whole Life Insurance

A life insurance contract with level premiums that has both an insurance and an investment component. The insurance component pays a stated amount upon death of the insured. The investment component accumulates a cash value that the policyholder can withdraw or borrow against.

Universal Life Insurance

A type of flexible permanent life insurance offering the low-cost protection of term life insurance as well as a savings element (like whole life insurance) which is invested to provide a cash value buildup. The death benefit, savings element and premiums can be reviewed and altered as a policyholder’s circumstances change. In addition, unlike whole life insurance, universal life insurance allows the policyholder to use the interest from his or her accumulated savings to help pay premiums.