Learning About Life Insurance Policies
Life insurance is a complex financial product with many different options and choices available to you as a policyholder. Make sure you understand how this financial product works before you buy into a policy.
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Types
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Term life insurance is the most basic type of life insurance. You pay a premium in exchange for a death benefit. This benefit typically lasts for 30 years or less. Whole life insurance lasts for your whole life and offers guaranteed death benefits and guaranteed cash values. Universal life insurance offers flexible premiums, death benefits and non-guaranteed death benefits.
Benefits
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Term life insurance offers low-cost death benefits. Whole life and universal life insurance offer death benefits and cash values. Universal life offers the potential for higher cash value accumulation than whole life insurance.
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Considerations
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Make sure you buy the correct type of insurance. Term insurance is ideal if all you want to do is insure your mortgage or a short-term loan. Whole life and universal life is ideal if you want your insurance to extend to your entire life, provide burial insurance, supplemental retirement income or provide benefits that can be passed on to your children, grandchildren or a charity.
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