Life Insurance Explained in Easy Terms

If you already have some form of life insurance, you may think you’re adequately covered.

But have you checked lately to see if it’s the right kind and whether it’s enough?

One thing to consider when looking at life insurance is the type of insurance.

Term Life Insurance

With a term life insurance policy, you pay an annual premium and, in exchange, an insurance company promises to pay a death benefit to your beneficiaries if you die while the policy is in force.

Whole Life Insurance

Whole life insurance is similar, but you purchase the policy to cover your whole

life instead of a term and the life insurance company will invest a portion of your premiums, possibly even sharing investment proceeds with you in the form of a dividend.

Universal Life Insurance

Universal life insurance is another category.

With this type of policy, you can contribute more than the premium into a cash-value account, where it will be invested.

You can allow the cash value to build or use it to pay premiums.

Universal Variable Life Insurance

A variation of a universal policy is universal variable life insurance.

This type of insurance allows policyholders to choose the investment vehicle.

There are other things to consider as well.

For example, you’ll want to be sure the term of the policy meets your needs. You’ll most likely want the policy to last as long as you have dependents. And you should always buy enough term insurance to meet your needs.

Of course, you don’t have to make choices about life insurance alone.

Your advisor can help you determine if you need life insurance and, if so, what kind and how much is most suitable for your individual situation

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