What Are the Different Types of Life Insurance?
There are two main types of life insurance you’ll frequently hear about: temporary and permanent life insurance.
Temporary/Term Life Insurance: This type offers coverage for a specific period of time, for example in 10, 20, or 30 -ear terms. If you pass away while the policy is in effect, your beneficiary will receive a death benefit. However, if your term life insurance policy expires before you pass away, your beneficiaries won’t receive a payout.
Depending on your policy, you may be able to extend your term after the initial policy term ends or convert it to a long-term policy. And this is where the next type comes in,
Permanent/Whole Life Insurance: Offers coverage for your whole life. Typically, a premium for whole life insurance will cost more than term life, but that’s because not only does it provide lifelong protection, but the policy also has the ability to accumulate cash value. Cash value is a component of whole life insurance that you can borrow against while you’re still living.You can use it for things like helping with a down payment on a house, college tuition or investing in a business. Keep in mind, if you don’t pay back the loan plus interest your death benefit will be reduced by any outstanding loan and interest amounts.
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