Life insurance can be the foundation of your financial security and provide comfort and stability for your family. The purpose of life insurance is to help provide your loved ones with financial protection after you die, in exchange for the premiums you pay your insurer during your lifetime. Some life insurance policies can provide you with financial protection for the short term. Others accumulate cash value, offering a living benefit that can be used for supplemental retirement income, funding for a child’s education, or cash for emergencies.
Term life insurance provides coverage for a set period of time at a generally lower cost than permanent insurance. Many term life insurance products allow you to convert to a permanent policy, such as whole life insurance. The cost of insuring oneself increases over time so it’s important to understand your short and long term needs for financial security when you select a policy.
Permanent life insurance provides you with financial protection for your entire life, as long as the policy remains in force. Because of the flexibility permanent life insurance offers, there are several types of policies available to purchase.
- Whole Life Insurance
The benefits of whole life insurance include guaranteed fixed premiums, a guaranteed death benefit and guaranteed cash value growth. This means with whole life insurance your premiums never increase as long as they are paid. Also, you can take advantage of the living benefits which enable you to borrow against the cash value of the policy for any purpose while you’re alive. Borrowing against the cash value can help in financing life-changing events or emergencies, and the policy’s cash value accumulations grow on a tax-deferred basis. One thing to keep in mind when purchasing whole life insurance is that loans reduce the death benefit of the policy and loan interest should be repaid to prevent policy lapse.
- Universal Life Insurance
Universal life insurance provides lifetime death benefit protection along with flexibility that gives you choices as your needs and finances change. It offers options such as coverage amounts that may be increased or decreased, and premiums that can vary.