When you purchase life insurance, you are entering a contract with the insurance company. You will make premium payments to the company, and the insurance company will provide a lump sum payment to the beneficiaries listed in the contract upon your death. The money is then used to pay off your standing debts and provide you with funeral services and burial costs, including a casket or urn if that's what you defined in your will. There are different kinds of life insurance you can choose from. This guide will discuss the three types of life insurance you can get and which kind of people they benefit.
Whole
This life insurance is a permanent insurance that provides lifetime coverage. The downside of this insurance is the payments are typically a lot higher than other kinds of insurance, since it's supposed to cover you for a lifetime. The premiums are fixed, whereas other insurance policies may be flexible. This insurance is typically used as an estate planning tool, if you have wealth or estates you need to transfer to your beneficiaries. The proceeds to the beneficiaries are tax-free.
Universal
Universal life insurance is another policy designed to give lifetime coverage. The main difference with whole life insurance and universal is that the premiums are flexible. This means you can lower or raise the premium payments or coverage at any time during your life. Like the whole insurance, the premiums are higher than other policies. It is useful for people who need to preserve and transfer their wealth to the beneficiaries.
Term
This insurance gives financial protection for a certain amount of time. It is not lifetime coverage like the previous types. You can decide how much coverage you want, such as 10 or 20 years. The premium you pay will stay the same during the coverage time. Once the period is complete, you can continue receiving coverage, but the premiums will usually go up. However, the premium rates are a lot lower than whole and universal coverage.
Considerations
Once you find the type of insurance policy you want, it's time to find a company to purchase it from. There are so many different companies you can choose from, so it's best to shop around and find the one that best suits you. Call and ask for a free quote to determine what the premiums might be. After getting life insurance, you may also want to update your will and include any relevant information regarding the new policy.
For more information, visit a site such as http://www.dainsurance.com.
Share26 September 2017
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