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Life Insurance

Life Insurance

Life insurance provides financial support to a family when a loved one dies. This type of insurance is something most people don’t like to think about, but it is useful insurance to have. Some policies are small, and intended only to cover the costs of a funeral and burial. Sometimes more coverage is necessary, especially when the policyholder has a spouse or children who will suffer financially in the event of the policyholder’s death. A business might even obtain a life insurance policy for financial protection if a key employee dies.

This type of insurance is easy to understand. The policyholder pays a premium in exchange for a death benefit, which is a payment to a beneficiary if the policyholder dies. The insurance is available in term life and whole life policies. Term policies last a set number of years. Once the number of years passes, the policy expires and no death benefit is available if the policyholder dies.

Whole policies have no set date of expiration. They pay a death benefit as long as the policy is active. To remain active, the policyholder must pay the premiums as required. Whole policies also build a cash value if the policyholder so desires. Universal life insurance is a combination of whole life and term life insurance. It uses cash value to offset the cost of the premium.

One benefit of a whole life policy is that the policyholder can use of the cash while still living. It works similar to a savings or retirement account. It also guarantees the death benefit – no matter when the policyholder dies. The best thing about a term life policy is that it is more affordable. A term policy can also provide a larger benefit than a whole life policy.