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Life Insurance is a Smart Move
Life insurance is a form of insurance on a person’s life. When the person dies, the insurance company pays a benefit to the beneficiary. Term life, whole life and universal life are the three types of life insurance.
Whole life is coverage that lasts the lifetime of the insured person. It doesn’t expire when the person reaches a certain age. The premiums are fixed, but they’re more expensive than other forms of life insurance premiums. You also pay premiums over your lifetime, and there is a savings component. The cash value accumulates, and the cash is tax-deferred. That means you can use the money, but you will probably pay taxes.
Term life is the least expensive and most popular. It lasts for a certain number of years, and then it lapses. If you don’t die before the term expires, then your beneficiaries don’t get a death benefit when you die. If your insurance expires when you’re 100, and you die two days after your 100th birthday, then your beneficiaries get nothing.
Universal life is a combination of term life and whole life. It is permanent life coverage, but premiums depend on what the insured person does with interest earned. A benefit of this type of policy is the cash value, plus the premium and savings can be adjusted. The policyholder can also use interest from the cash value to pay for premiums.
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