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What Is Life Insurance & Why It Is Important

Life insurance policies are generally categorized into three general types: term life insurance, permanent/whole life insurance and flexible (adjustable life, universal life, and variable life) insurance.
 

Term Life Insurance

Of all of the types of life insurance available today a term life insurance policy is considered to be the most basic form of insurance available. Term life insurance offers the largest insurance protection compared to all other types of insurance, and is the best buy for those who are in need of temporary life insurance coverage. Term life insurance offers:
  • affordable protection with a guaranteed premium
  • Death benefits are paid within the specified time of the policy's term
  • This type of insurance will not build up a cash value
  • An excellent selection for people needing temporary insurance protection
A term life insurance policy is lower in price at the time of purchase than a permanent life insurance policy but will increase in price when the policy is renewed. It also will not build cash value as permanent life insurance does. Death benefit is paid only it the insured dies within the term of the policy.
 

Permanent Life Insurance

If you're looking for long-term financial protection and a death benefit, then you'll want to tailor a permanent or whole life insurance policy to meet your needs. There are a variety of permanent/whole life insurance plans available that can be easily tailor-made to fit your individual needs. Permanent/whole life insurance polices offer:
  • Protection from the day you purchased your permanent life insurance policy until your death.
  • Cash value for the period of time of the policy
  • The ability to borrow for your cash value for anything you may need IE loan for your children's education, auto or home loan or use for your retirement.
In the long-run permanent/whole life insurance offers cheaper coverage than term life insurance does. Another nice feature permanent life insurance is that you cancel your policy and receive its cash value in a lump sum.
 

Flexible Life Insurance

If you are in need of a life insurance policy for special needs, you should consider a flexible life insurance policy:
  • Adjustable life
  • Universal life
  • and variable life insurance

Flexible life insurance polices can be custom-made to your particular insurance needs.

Adjustable life insurance polices allows you (after initial payment), to pay premiums at any time, in any amount you choose, subject to specified minimums and maximums. Adjustable life insurance makes it easy to reduce or increase the death benefit than a traditional whole life policy.

Universal life insurance is ideal for personal or business financial protection with access to its cash value. You have the flexibility of changing your premium payments and death benefit as your needs change. Universal life insurance policies give you the flexibility to increase or decrease your coverage as needed.

Variable life insurance policies allow you the ability to choose among a variety of investments offering stocks, bonds, combination accounts, or options that guarantee principal and interest. This type of insurance can be expensive and risky, depending on the type of investments you choose. Death benefits and cash value will vary depending on the performance of the investments you select. The cash value of a variable life policy is not guaranteed so if the market doesn't perform well, the cash value and death benefit may decrease.

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