Sunday, October 18, 2015

Life Insurance Coverage 101

Know the basics on your life insurance coverage, since it is a long term investment that will protect your love once. Life insurance should be designed to fit your situation so it is not an "one size fits all." Most people, get the most coverage for the lowest cost as possible that they can afford.

There are two types of life insurance policies:

Term life insurance - this is basically a policy that gives death benefit for love once after you die. There are no other features.

Whole-life or permanent life insurance - this policy combines death benefit for love ones with a cash value that you can access while you are still alive.

Term insurance is a wise choice for younger and healthy people who are just starting out with life insurance since it is less costly. In term insurance you can keep your premiums as low as possible.

Married couple usually purchase this kind of life insurance to keep them secured financially in an event one dies. Most companies also offers this kind of insurance policy as added employee benefits. However, if you leave your company the policy will end.

Term insurance expires after a stated period of time or once you reach a specific age, so your love once is only secured during the stated term. This kind of life insurance is feasible only when you are young because they get much more expensive as you age.

Permanent life insurance has a number of kinds, that include traditional whole life, variable life, universal life or variable universal life. Just like the term insurance policy your beneficiaries will get paid when you die, the difference is that it doesn't have a stated termination date. If you have paid the adequate amount of premiums and the policy is in force, your love ones will receive the death benefit.

Premiums are higher and there are often have additional costs for permanent life insurance compared to term insurance policies. This type of life insurance also has cash value that accumulates as you pay premiums. Premium payments must be sufficient to avoid a policy lapse, but a portion of those payments accrue within the policy and can grow on a tax-free basis.

Before purchasing life insurance coverage make sure that you have assess every option there is and make sure that you have discuss your choices with a financial adviser.

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