Understanding life insurance can be overwhelming, but we’re here to help. Before you start shopping, get equipped with the basic vocabulary and knowledge you need to make sense of all the basics of life insurance.
Life insurance is a contract between you and a life insurance company, which pays out a sum of money (called a death benefit) to designated beneficiaries upon your death, in exchange for regular premium payments. There are several types of life insurance that are detailed below, each with its own parameters and timing for paying out a death benefit, depending upon the needs of the insured.
Term life insurance lasts for a specified period of time, usually between 10 and 35 years, at which point the policy can be renewed or converted to a permanent life insurance policy. It’s typically the most basic and affordable life insurance option.
Permanent life insurance policies provide life insurance coverage for the insured’s entire life. Such policies accumulate cash value (explained later), and the payout is guaranteed at the completion of the policy. There are several different types of permanent life insurance:
Whole Life Insurance: Basic lifetime coverage with fixed premiums and guaranteed cash value accumulation.
>> Find out more: How does whole life insurance policy work?
Universal Life Insurance: Lifetime coverage with flexible premiums and death benefits, plus cash value accumulation
Index Universal Life Insurance: A type of universal life insurance whose cash value accumulates through the allocation of money to either a fixed account or an equity index account.
Variable Universal Life Insurance: A type of universal life insurance whose cash value accumulates via specified investment options. Typically, the most complex life insurance option as it requires a more hands-on approach from the client as well as a knowledge of investments and investment risks.
These policies cover not just one but two insured individuals. In this instance, the death benefit is paid upon the death of the second policyholder. These policies are usually bough for estate planning purposes.
>> Find out more: Survivorship whole life insurance policy – Is it worth buying?
LifeQuote offers its services to those individuals looking to make the most well-informed choice possible and understanding what policy is right for you. Armed with knowledge and increased confidence, our satisfied customers have gone on to make educated decisions about the future of their life insurance policies.
>> Check out our customer testimonials
Take advantage of our professionally trained staff that is always available and ready to guide you in your journey toward understanding life insurance. Talk with a licensed insurance agent today. Do not be intimidated or confused by the various life insurance options available. Get informed. We will help demystify the life insurance policy process and will have you on the road to protection in no time.
Get Informed with Our Life Insurance Resources:
Thank you for reading our article on “Understanding Life Insurance”.