What You Need to Know
Life insurance provides financial security for your loved ones in the event of your passing. Understanding your options is crucial to selecting the right coverage. The two main types of life insurance are term life insurance and whole life insurance, with additional flexible options to consider.
Term Life Insurance
Term life insurance is straightforward and affordable, covering you for a specified period. If you pass during this term, your beneficiaries receive the payout as a lump sum or monthly payments. If you outlive the policy, it expires. Terms can range up to 30 years, making this an ideal choice for younger individuals or those seeking lower premiums.
Whole Life Insurance
Whole life insurance is a permanent policy that never expires as long as premiums are paid. It offers a guaranteed death benefit and accrues cash value over time, providing a long-term financial asset. Though more expensive than term policies, it is beneficial for estate planning or lifelong coverage.
Flexible Policy Options
Universal life insurance provides flexibility by allowing adjustments to premiums and death benefits without canceling the policy. You can even use the policy’s cash value to cover payments during financial challenges. However, its interest rates may vary, impacting overall returns.
Life Insurance as Savings
Some policies enable borrowing against their cash value for major expenses. While this preserves traditional savings, unpaid loans or fees can reduce the death benefit. For cost-efficiency, some individuals combine a term policy with a savings account.
As You Age
Older individuals often choose annuities, which provide regular payouts and reduce the risk of outliving their assets. Finding affordable term policies can be challenging as you age, making early investment in life insurance crucial.
Life insurance is a significant decision. Speak with an advisor to choose the right policy for your financial goals and family’s future.
