When people are searching for life insurance information, most become overwhelmed with all the information that is available. The following is a list of some of the most frequently asked question to help you cover the basics of life insurance.
What is life insurance?
Life insurance is a legal contract, or policy, between you and the insurance company. It guarantees to provide money to the people you choose (beneficiaries) in the event that you pass away within the stated time frame of the policy.
How does it work?
A life insurance policy works by the policyholder (you) paying a certain amount of money every year, also known as a premium, and in turn your beneficiaries receive a financial lump sum upon your death. It is an important tool in your life that is meant to help reduce financial risks and minimize financial losses for the loves ones left behind.
Are there different kinds of life insurance?
There are two main types of life insurance: Term and Permanent. The most common lengths available for Term Life Insurance include 5, 10, 15, 20, 25, and 30-years, and will vary from company to company. Permanent Life Insurance is broken down into Whole Life Insurance, Universal Life Insurance, and Variable Life Insurance.
What is Term Life Insurance?
This is the basic type of life insurance, and provides only insurance protection for the policyholder. It does not accumulate cash value, and it does not have the ability to be borrowed against. It is called “Term” because the policy is set for a specific term of time, such as 5 or 10 years. After this set time period, it is up to the policyholder to renew or cancel the coverage.
What is Permanent Life Insurance?
Permanent Life Insurance is meant to cover a person for as long as they live. Not only does it insure the policyholder, but it also acts as a type of savings account. The money that accumulates over the years with this account can be accessed and used during the policy holder’s lifetime. If the policyholder dies, their beneficiaries receive both the insured amount and the accumulated savings.
Where can I buy life insurance?
There are many different ways to acquire life insurance information and purchase policies. The most trusted method, and for those looking for large amounts of insurance, would be to find an insurance agent or broker to work with personally. You can also find life insurance information, and receive quotes online or over the telephone.