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Death is an uncomfortable subject, particularly when discussing your death or the passing of someone you cherish. But death is one of the only assurances in this world, and life insurance can protect your loved ones when it hits close to home.
There are many different types of life insurance and not all are created equal. The type you seek should depend on your individual life goals and financial commitments. As your life situations change, your life insurance policy will likely need to be adjusted.
There are two main types of life insurance, namely term and whole life.
Term life insurance is the most basic type of life insurance. It is only paid out if death occurs within the time frame that the insurance policy covers, which usually ranges between one and thirty years. Most term insurance policies don’t have additional benefit clauses. The initial cost of term life insurance is less expensive than the alternative. However, rates increase as you get older.
People frequently purchase term life insurance policies to protect their children and spouse. If the policyholder dies during their working years. The benefits for term policies are paid out in one lump sum instead of regular instalments.
There are two main kinds of terms for term life policies. If you see the term “level” in your policy, it means the amount of life insurance remains unchanged throughout the insurance policy term. The other option is a decreasing term, which is usually a lower cost and implies that the death benefit decreases in one-year increments throughout the policy’s duration.
Life Insurance products designed for groups differ compared to life insurance sold to individuals. The group life insurance product is a product that cannot change in cash value. An employer generally provides insurance for the length of your employment. But it can end when you retire from your job. Limits are set by your employer and may require you to take part in a medical examination.
Whole life insurance, often called permanent life insurance, provides several death benefits no matter when you die, even if you live to 100. Complete life insurance plans accrue cash value over time as determined by a fixed interest rate and premiums that are paid by the insured throughout their lifetime. Whole life insurance plans can accumulate tax-free over time and can be used as a tool for estate planning if you have wealth you want to protect and then transfer to beneficiaries. This is why premiums tend to be more expensive than term life rates.
Read more about three kinds of whole life insurance
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