What is Life Insurance
Life insurance is often referred to or known for covering your families financial needs at the time of your death. While that is the end result of the policy whether we like to admit it or not, that is not the only benefit it provides. Life insurance comes in different policy structures, each serving its own unique purpose.
Different Types Of Life Policies
While whole life policies carry the same benefit to beneficiaries in the event of your death, whole life is also a huge asset. This policy type lasts for the entirety of your life and stay in effect for as long as you pay your premium.
Whole Life also accumulates a cash value on a tax-deferred basis which you can use at any time in the agreed window.
An example of this is a 25 year old started their whole life policy at 18. They want to buy an engagement ring for their girlfriend. They can use the cash value in their whole life policy to pay for the ring and pay back that value over time, with no interest or tax.
Term life insurance provides coverage for a specific period of time. These terms are usually in either 10, 20 or 30 years timeframes. These, often low cost, policies offer a great backing during times such as paying off a mortgage.
Often referred to ask "mortgage insurance" this policy is used mainly for that purpose.
An example of this is if you buy a house with a $500,000 mortgage and you suffer a bad accident and die. That term life policy will help to pay off the mortgage for your family.