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What Is Life Insurance?
Life insurance serves as an agreement between you and your insurance provider that a benefit specified by the policy will be paid to designated loved ones upon your passing. There are two types of life insurance: Term and Whole.
Whole Life Insurance, also known as permanent life insurance, pays a
death benefit whenever you die – Even if you live to be 100! This type of life
insurance is also structured to provide a cash value that you may be able
to access under certain conditions.
What Are The Types of Life Insurance?
There are four types of permanent life insurance policies from which you can choose.
Whole or Ordinary Life
This is the most common type of permanent insurance policy. It offers a death benefit along with a savings account. If you pick this type of life insurance policy, you are agreeing to pay a certain amount in premiums on a regular basis for a specific death benefit.
Universal or Adjustable Life
This type of policy offers you more flexibility than whole life insurance. You may be able to increase the death benefit, if you pass a medical examination. The savings vehicle (called a cash value account) generally earns a money market rate of interest. After money has accumulated in your account, you will also have the option of altering your premium payments – providing there is enough money in your account to cover the costs.
This policy combines death protection with a savings account that you can invest in stocks, bonds and money market mutual funds. The value of your policy may grow more quickly, but you also have more risk. If your investments do not perform well, your cash value and death benefit may decrease. Some policies, however, guarantee that your death benefit will not fall below a minimum level.
If you purchase this type of policy, you get the features of both variable and universal life policies. You have the investment risks and rewards characteristic of variable life insurance, coupled with the ability to adjust your premiums and death benefit that is characteristic of universal life insurance.
Frequently Asked Questions
Learn more about life insurance by exploring the answers to common questions, and then contact us for additional information.