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 Life Insurance
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
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.
Universal Life Insurance
Universal life insurance is a form of permanent life insurance. In the insurance industry, it is often referred to simply as “UL” or “UL insurance.” In exchange for paid premiums, the insurance company assures a death benefit to be paid out should the policyholder die. Like other permanent insurance options, universal life insurance comes with a cash value component. The cash value has the potential to grow over time.
Indexed Universal Life Insurance
Indexed universal life insurance is a form of universal life insurance. Another name for this insurance is “IUL insurance.” The “universal” part means that you have flexibility with your premium payments and other policy components. You may adjust your premium, death benefit, and other parts of the policy throughout the contract.
Term or Permanent Life Insurance?
First, let’s discuss the basics of each type of life insurance.