There are two main types of life insurance available that provide you with the assurance that upon your final days, your close family and dependents will be covered financially. Life insurance and term life insurance provides financial protection and that much-needed security blanket. If you’re not quite ready or unsure of what to look for in a life insurance product, it helps to do your research to ensure both you and your family understand what to expect. It’s also important for you to understand the difference between term life insurance and life insurance before making this significant decision.
Read on to learn about what term life insurance and whole life insurance are, including their advantages, cost and features.
What Is Life Insurance?
Life insurance, also known as whole or permanent life insurance, is insurance coverage for an entire lifetime that is paid ultimately upon your passing. Most permanent life insurance policies require payment annually, however, the coverage is often at a fixed rate despite one’s health. Life insurance is one of the most important insurance investments one can make for themselves and their loved ones. By purchasing whole life insurance, you are preparing your family and allowing them to have security upon your inevitable passing. The life insurance policy is paid out to your immediate family or dependents to ease their financial burden. Why is life insurance important? For the following reasons:
- Whole life insurance allows your family and yourself to maintain a comfortable lifestyle financially and alleviate the stress and worry of how to manage finances that can take away from your family’s time to cope with your passing.
- Life insurance can help pay off current debts, including mortgages or student loans and even cover the cost of funeral expenses.
- Life insurance can go towards tax-efficient estate planning.
What Is Term Life Insurance?
Term life insurance is a coverage policy that is provided to the customer for a specific duration of time or term. It could be anywhere from ten, twenty to thirty years and during the term, the coverage costs will remain the same. However, the cost could change if you have to renew the policy. This provides your family and dependents with a financial payout upon your passing within the period of your term. Term life insurance is a viable option for those that desire a more affordable life insurance policy with temporary protection. It is important to remember that term life insurance is just that, applicable for a duration of time. Most individuals purchase a term life insurance policy for 20 years, which is an appropriate amount of time and still provides ample security for yourself and your family.
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