types of life insurance

     There are different types of life insurance to meet the different needs of people.  Find out what’s right for you.

     There are many types of life insurance that can help protect your family, and they all fall into two main categories: term and perpetual.

     With life insurance, you get coverage for a specific period of time (for example, 10 years).  If you die during this period, the money will be paid to your beneficiaries, but after this period you will need to take out new insurance or waive it.

     Perpetual life insurance (ie, whole life insurance and universal life insurance) provides lifetime coverage with a cash value component that can help you achieve many goals, such as: B. building your life savings retirement, while also providing lifetime protection and other financial benefits for life.  Far.  To help you choose the type of protection that’s right for you, here’s what you need to know:
     What are the essential characteristics of a life insurance contract?  At its core, life insurance is a promise: to provide financial protection for your loved ones when you’re gone.  How the policy delivers on that promise is determined by several key features:

     Death benefit: Amount paid by the insurance company upon the death of the insured.  Normally, this benefit is exempt from income tax.

     Beneficiary: The person or persons receiving the death benefit.  It can all go to one person (eg, surviving spouse) or shared among multiple people as a percentage (eg, spouse can get 50% and two adult children can get 25% each).  And by the way, the beneficiary doesn’t have to be a blood relative or even an individual: You can donate all or part of your death benefit to an entity, such as a non-profit organization, if you wish.  .

     Policy Duration or Period: The period during which the insurer agrees to pay for funeral services.  In a term policy, it is defined as a specific number of years, say 10, 20, or 30. A perpetual policy lasts for the life of the insured, for life while premiums are paid, and indefinitely for life depending on the policy.  You have enough funds to pay your monthly expenses.

     Premium – Monthly or annual payments required to maintain the validity of the policy.

     Cash Value – The investment component of a policy that accumulates over time and can be withdrawn in cash or borrowed.1, 2 A term policy has no cash value.

     Different types of life insurance and their main characteristics

     term life insurance

     Policies are exactly what the name suggests: coverage for a specified term or period of time, typically 10 to 30 years.  It is sometimes called “only life insurance” because, unlike whole life insurance, the policy has no cash value.  It is only to pay your beneficiaries if you die during the term.

     Most individual policies have premium levels, so you pay the same amount each month.  Once the term expires, there is no protection anymore, or you have to do without it or take out a new policy, which is probably more expensive: the older you are, the more expensive it is to take out a policy.  .  However, many providers, including Guardian, allow you to convert a term life insurance policy to permanent life insurance for part or all of the policy term.  When you buy term life insurance from an employer, rates are typically issued “as you age,” which means that rates increase over time.

     This can help you determine the cost of term life insurance at the level of coverage you want.  For how many years does your family need financial protection?  For most people, this is true until the children are grown, the house is unpaid, and there is still money that can serve as a safety net for the surviving spouse.