Life Insurance Tips and Advice
Life Insurance is one of those purchases that you might not know why you need it, just that you probably need it, and the amount you require depends on several factors.The main purpose of life insurance is to provide a replacement for your income for your dependents in the event of your death.
Young families and middle-aged couples are great candidates for life insurance, but even if you don’t fall into either of these categories, life insurance may still be a wise purchase.
Read on to learn more about the types of life insurance policies available, the people most in need of life insurance and how to determine the coverage you require.
Types of Life Insurance Policies
There are two main types of life insurance available: term and permanent life insurance. Permanent life insurance breaks down into three varieties, including whole, universal and variable universal.
To choose the one that’s right for you, consider the death benefits, flexibility and tax advantages.
Term life insurance offers the lowest premium prices and protects your dependents if you die anytime during the term, which is when the policy is in effect.
Terms normally range from 1–30 years.
Whole life insurance provides a guaranteed death benefit in addition to its investment component.
This allows you to accumulate tax-deferred cash value that you can borrow from against the policy.
Universal life insurance builds cash value over time. Added benefits include having the flexibility of setting your monthly premium and death benefit while gaining tax-deferred earnings.
Variable universal life insurance has all the benefits of universal life but with a cash value that’s dependent on your policy’s investment returns. Your premiums are invested according to your wishes, and you gain tax-deferred earnings.
Groups That Need Life Insurance
Each type of life insurance has its own benefits and drawbacks, making some types better suited for certain people than other types. To learn more about which policy might be the most effective choice for you, consider the following summary.
Life insurance can provide “income replacement” so that your family can continue to pay everyday expenses after you die. Term life is the right option to cover your working years and replace your income.