Life Insurance
Generally speaking, life insurance is a form of coverage that pays benefits after someone's death or disability. In exchange for
premiums paid in the present, the policy holder receives the confidence that a more substantial amount of money is going to be
accessible in the future to help his or her beneficiaries pay financial obligations and funeral costs. Some forms of life insurance may also be used as a tax-deferred investment to provide funds during a person's lifetime for retirement or everyday living expenses.
The different types of life insurance typically includes:
- Term Insurance - Term life insurance is the simplest and least expensive type, as it pays benefits only upon the policy holder's death. With annual renewable term insurance, the policy holder pays a low premium at first, which increases annually as he or she gets older. With level term insurance, the premium amount is set for a certain number of years, then increases at the end of each time period. It is generally recommend that people who select term insurance make sure that their policies are convertible, so they can switch to a cash-value plan later if needed.
- Whole Life Insurance - With whole life insurance coverage, the policy holder pays a level premium on an annual basis. The plan typically covers until the end of the person's life—age ninety or one hundred. Typically, the policy holder is for the premium, additionally, the extra amount of money goes into an interest-bearing dividend account known as a cash value account. The individual can use the cash within this account to pay for upcoming payments, or could withdraw it or borrow against it to cover living expenses.
- Universal Life Insurance - Universal life insurance has been available since the 1980s to provide a higher-interest alternative to whole life insurance coverage. Universal life rates are established not just on the cost of the insurance, but additionally on the rate of interest offered on the cash value. Still, they are usually less expensive compared to whole life policies.
