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What Is Life Insurance?
Life insurance is a contract that provides financial protection for a policyholder’s life for a set amount. A policyholder must pay a monthly or annual premium in exchange for coverage.
When the policyholder dies, their named beneficiary is entitled to the contract’s value, known as a death benefit.
A death benefit is a tax-free payment that your family or loved ones can use to cover expenses such as a funeral, mortgage payments, college funds, or to supplement the policyholder’s lost income.
The Power of Living Benefits: How Life Insurance Can Support You During Life
Life insurance is often associated with the protection it provides for loved ones after the policyholder’s death. However, it can also benefit the policyholder during
Estate Planning: How to Maximize Life Insurance within Estate Planning
Effective estate planning ensures your wealth is judiciously transferred to your beneficiaries. Here’s how life insurance can be an integral part of estate planning strategies:
What Are the Different Types of Life Insurance?
There are many kinds of life insurance policies available. Each is designed to meet your financial objectives and protect your loved ones after your death. Term life and permanent life insurance are the two most common types.
Term Life Insurance
The more popular option is term life insurance, which provides simple and affordable coverage for a set period.
The advantage of term life insurance is that you can tailor your coverage length, or “term” to meet your specific financial needs. Term life insurance expires when the term has ended or when you fail to pay your premiums.
You can, for example, match term life insurance to the length of time it takes to pay off a financial obligation, such as a mortgage.
If you die while your policy is still in effect, your beneficiaries can use the death benefit to pay off your loan.Â
Here are some examples of term life insurance policies:
Decreasing term life insurance is a renewable term life insurance policy with decreasing coverage over the policy’s life.
Convertible term life insurance allows policyholders to convert a term policy to permanent life insurance.
Renewable term life insurance is based on a quote for the year the policy is purchased. Premiums typically rise annually and are lowest at the start of the policy.
Permanent Life Insurance
Permanent life insurance is a little more complicated than term life, but the main difference is that it lasts your entire life and only expires if the insured fails to pay their premiums.
While permanent life insurance is significantly more expensive than term life insurance, many policies include investment tools, and some allow you to borrow money against your plan.Â
Whole life insurance is a type of permanent life insurance that builds up cash value over time.
Cash value life insurance allows the policyholder to borrow against the policy as a loan or source of cash to pay premiums.
Universal life insurance is a type of permanent life insurance with an interest-bearing cash value component. Universal life insurance has flexible premiums that can be adjusted over time and is available with a fixed or increasing death benefit.
Indexed Universal Life Insurance is a type of universal life insurance in which the policyholder earns a fixed or equity-indexed rate of return on the cash value component.
Variable universal life insurance allows the policyholder to invest the policy’s cash value in a separate account. It also has flexible premiums and can have a fixed or increasing death benefit.Â
Call now to speak with a licensed insurance agent at
(800) XXX-XXXX TTY 711
Secure your family’s future today. Let us guide you through your life insurance options and provide peace of mind for you and your loved ones.
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