The simplest form of life insurance is term insurance. The policyholder pays a monthly premium over a term – usually 10 or 20 years – and if the insured person dies during this term, a benefit is paid to the beneficiaries. The policy is cancelled if the policyholder lives beyond the term.
Whole Life Coverage
The next step up from term insurance is whole life coverage, which covers the policyholder for their entire lifespan. It remains active until the insured person dies or stops paying the monthly premium. A portion of the monthly premium is typically placed in an account and can be withdrawn as a loan or be used to pay the premium. The cash that accumulates in the account is tax deferred.
Universal Life Insurance
Universal life insurance offers the low-cost protection of term life insurance as well as the savings aspect of whole life insurance. Unlike whole life insurance, though, universal life insurance allows the insured to use the interest from his or her accumulated savings to help pay monthly premiums. This option usually offers more flexibility than other plans.
Always review your options carefully before committing to one life insurance policy. If you aren’t sure what policy best fits your needs, contact Skeen Insurance today for more information.