Life Insurance If you are young, and are looking to protect your growing family, or perhaps you are a senior citizen looking to cover your final costs, life insurance is a very necessary investment that will give you the security and peace of mind that you need. There are a wide variety of life insurance types for you to consider when determining which one is best for you and your family.

When thinking about  life insurance coverage, there are two main types that you will need to understand: Whole Life Insurance and Term Life Insurance. If you are unsure  what the difference is between both types of life insurance coverage,  do not  worry,  we are here to help you choose the correct plan for you so that you do not waste money.

There are four major types of policies

Term insuranceThe simplest form of insurance. You purchase coverage for a specific price for a specified period. If you die during that time, your beneficiary receives the value of the policy. There is no investment component.

Whole lifeSimilar to term, but you purchase the policy to cover your “whole life” not just a set period. Premiums remain level throughout the life of the policy, and the company invests at least a portion of your premiums. Some firms share investment proceeds with policyholders in the form of a dividend. Many companies will offer “a relatively low guaranteed rate of return,” but in reality pay at a rate in excess of the guarantee.

Universal lifeYou decide how much you want to put in over and above a minimum premium. The company chooses the investment vehicle, which is generally restricted to bonds and mortgages. The investment and the returns go into a cash-value account, which you can use against premiums or allow to build. With some policies, sometimes called Type I or Type A, the cash account goes toward the face value of the policy on the death of the policyholder. With a second variety, sometimes called Type II or Type B, the beneficiary receives the face value of the policy plus all or most of the cash account. While Type II is meant to provide a partial hedge against inflation, it demands higher premiums as you get older than Type I.

A variation of a universal policy, often called universal variable life, allows policyholders to choose investment vehicles.




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