Life Insurance Policies
Life insurance, while being one of the most important types of insurance people need, is often the one most people put off buying as long as possible. Yet for those who realize the important role it can play in helping a family plan for the future and gain financial security after a loved one passes away, it is seen as a vital financial planning tool. While its main purpose is to pay a death benefit to the policyholder's remaining family, there are several types designed to meet different needs.
One of the most popular forms of life insurance is term life. Popular due to its low rates that stay fixed for the length of the policy, it's a popular choice for those looking for an affordable option. Most term life policies can last 10-20 years, so if needed a new policy must be bought when the old one expires. However, the rates for the new policy may be more than the original policy due to such factors as a person's age or health status.
Whole life coverage is another option for people to consider. Unlike term coverage, this policy only needs to be purchased once, and covers a person for the remainder of their life. Generally more expensive than term coverage, whole life is guaranteed to have premiums that never increase as a person ages, will earn interest at a fixed rate and guarantees to pay out upon a person's death. So long as the premium is paid, the policy will stay in effect.
Universal life coverage has lots of freedom, but also contains more risk than the other options. The individual can decide how much they want the policy to be worth, how much the payments will be and when the payments will be made. Costing more than term but less than whole life coverage, it's viewed as a compromise between the two. This insurance does build a cash value that can be borrowed against at anytime, and the policy can also be cancelled at any time. If this is done, the cash value is returned to the policyholder.
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