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Life Insurance Basics

Are you thinking about getting a life insurance policy? There are many options available. If you’re wondering which path is the right one, here are life insurance basics which can help you get started.

Term or Permanent Life Insurance?

The term versus permanent life insurance debate has lingered for years. It is a long-standing question, but it need not be “either-or.” Neither type of coverage is universally superior to the other. Both options have appropriate uses, depending on the needs and situation of whoever is purchasing the policy.

First, let’s discuss the basics of each type of life insurance.

Term Life Insurance

Term life insurance gives coverage for temporary needs. It is considered to be the most straightforward form of life insurance. In a term policy, an insurance carrier promises to give coverage in exchange for a fixed rate of payments over a certain period.

This specific time-frame is known as the coverage period. It tends to last for 10-30 years. A 20-year span is the most common. Many people wonder if term insurance may be right for them. Let’s get into the basics of term life insurance, its features, and potential roles for it in a financial plan.

Whole Life Insurance

Having life insurance is an important decision, especially for those with dependents relying on their income. However, you may wonder what type of life insurance is right for you. Whole life insurance is just one of many insurance options to consider.

Whole life insurance is the most basic form of permanent life insurance. Unlike term life insurance, it will give lifelong protection, so long as the policy remains in force. In other words, the policy will lapse if premium payments are missed and the cash value exhausted (we'll discuss the cash value more later on). In exchange for paid premiums, the insurance company will pay out a death benefit in a lump sum once the policyholder has passed away.

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