Understanding Life Insurance
Term Life Insurance
A term life insurance policy works exactly how it sounds. Most people buy term life insurance to cover their working years or any term between ten years or thirty years. It all depends on their needs. Because term life insurance doesn’t include an investment component, it is almost always the most affordable coverage you can buy. One major benefit of term life insurance is that your premium will not change while your policy is in force.
Whole Life Insurance
This coverage, which is commonly referred to as permanent life insurance, adds an investment component. This type of policy builds cash value from investments made by your life insurance company. Your monthly premiums typically won’t change with a whole life policy and you can borrow against the cash value of your whole life policy.
Universal Life Insurance
Universal life insurance works similarly to whole life insurance in the fact that it provides permanent life insurance coverage that will never expire. However, it combines coverage within an investment component. Universal life insurance offers flexible premiums, the amount you pay into your policy can fluctuate from year to year. Due to the investment component of a universal life policy, your cash value accumulation may differ from year to year.
Final Expense
Final expense is a type of whole life policy designed to cover the cost that comes at the end of life. Typically used to cover funeral expenses and burial cost. It has a fixed rate, therefore your payment amount will not fluctuate from month to month. This policy does not require a medical exam but you may be asked a few health related questions.