It is vital to glean all the facts about life insurance coverage options before choosing a policy. In addition to the various levels of coverage, which in itself requires some understanding, these policies are fairly complex when they come in the form of investment vehicles. Read more for an idea of how these policies function and how they can benefit you for your particular situation and needs.
Term or Permanent?
All these policies can be boiled down into two formats: One is term coverage and the other is permanent. Making a decision between these two choices is perhaps the most important decisions one who is the market for life insurance will make. As the name implies, a term policy covers a policyholder for a set time period until its expiry, at which time one would need to reapply for a new policy. While there are variables, most policies will be in effect for anywhere from 10 to 30 year periods. Most policyholders will utilize this type of coverage to keep their beneficiaries from struggling with a myriad of expenses such as home mortgages or college costs, to name a few, once they have passed away.
On the other hand, permanent policies are costlier but provide the policyholder with far more benefits. In addition, the coverage remains active for one’s entire life, assuming that the premiums are kept up.
Anyone who is in the market for this kind of coverage will also be required to make more choices regarding what kind of policy best fits their needs. For example, there are options to consider like return of premium (ROP) insurance that allows policyholders to receive back all of the money paid as premiums once the coverage is expired. Keep in mind that these policies have higher premiums generally.
As far as permanent policies are concerned, quite a few people prefer to utilize these accounts as investment vehicles. The beauty of a permanent whole life policy is how it can build cash value over the long run. On top of that, it is often tax-deferred and the policyholder can even borrow against it, pay premiums with the accrued amount or opt to continue accumulating wealth. Speak with an insurance expert today for more details.