Many people pass up the chance to get life insurance just because they don’t understand it.
That’s a shame because life insurance has many benefits. Understanding that there are two very different types of insurance is the starting point to realizing these benefits.
1. Term Life Insurance
Term life insurance provides the benefit to the beneficiary for a specified term. To make this very clear, if someone were to pass away a single day past the term date, the beneficiary would not receive a benefit for the policy.
Term life insurance policies are usually less expensive than whole life policies because you’re putting money into them and the odds are that the insurance company won’t have to pay out because you’ll live longer than the term.
Term life policies are important. They’re designed to protect your family while your children are young and there’s a greater need for two incomes in the household. The death benefit is usually a lot higher because it’s designed to supplement one’s income for a longer period of time.
2. Whole Life Insurance
Whole life insurance is permanent insurance that lasts for the rest of your life as long as you pay the premiums.
A whole life policy builds cash value over time. At some point, the amount you put into the policy will be more valuable than the policy itself and the benefit amount will need to increase accordingly. State and federal regulations prevent policies from becoming upside down, or worth less than the amount put into them.
Most whole life insurance policies are designed so that you can take out portions of your death benefit for emergency situations when you’re still alive. In this way, the policy can act as a powerful financial planning tool, offering a security blanket for you and your loved ones.
A whole life insurance policy can even start to pay for itself, so that you can have the benefit without having to dish out payments each month.
The best way to ensure your coverage matches your needs is to speak with a knowledgeable agent. Request a quote to get started.