Think of life insurance as a financial safety net. Having a life insurance policy offers peace of mind by ensuring that your loved ones will be taken care of in the event of your death. A life insurance payout can be used for everyday expenses, retirement savings, or just about anything else your family may need.
What are the types of life insurance?
There are two basic types: term and permanent.
Term: This type is less expensive and has a set timeframe. It’s used to replace lost income so that your loved ones are not financially strained.
Permanent: The objective of this type of life insurance is to provide coverage that lasts your entire lifetime, not just for a certain period. This type can also be divided into two sub-categories:
- Whole: Provides lifelong coverage with a guaranteed rate of return and premiums that always stay the same. Whole life insurance also offers a savings component. This enables your policy to build cash value that lasts until you pass away.
- Universal: Coverage that offers you the flexibility to change your death benefit and adjust your monthly premiums. As your finances fluctuate over time, this type of insurance can be altered so that your monthly premiums can be subject to increase or decrease depending on your financial status.
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