Ensure Security With a Life Insurance Policy
As you get older and take more control of your finances, you start to think about long-term security through life insurance plans. However, getting insurance can be an extremely overwhelming and confusing process, especially with the many plans available and the technicalities.
Financial planning is no easy task given the many uncertainties that are difficult to predict. An appointment with an agent and you would see that there are several policies available, so choosing the right one can be challenging. Getting familiar with the standard plans and perhaps even methods like the bank on yourself life insurance will be useful for you to make the right decision.
It is never too early to jump on the insurance trend, especially as it has several benefits and can provide you with long-term security. With an insurance policy set in place, you can prepare for any possible event in the future. It may be tricky to understand how insurance policies work at first, but being knowledgeable will surely help you in the process.
Whole Life Insurance
A whole life insurance plan is one of the most common and traditional policies existing. You set a premium amount schedule to your liking. For instance, you can choose to pay smaller amounts over an extended period or larger amounts over a shorter period. Additionally, dividends are paid to the policy, and you can use them to either reduce your premiums or increase the death benefit.
When you make payment for your premiums, part of the amount accumulates as cash value. You can get a loan from your cash value, but unpaid loans will be subtracted from the death benefit.
Recently, the idea of bank on yourself life insurance has emerged. This concept involves taking out a whole life insurance policy and paying additional premiums to build up your cash value.
Term Life Insurance
Contrary to the whole life insurance policy, a term life insurance policy only covers a specified term that you set. Typically, the term duration is in multiples of five, such as 10, 15, or 30 years. The only value in the term life insurance policy is the death benefit as this type of plan does not have the cash value accumulation.
Since term life insurance only covers a certain period, it is much more affordable than a whole life insurance policy.
Another advantage to it is that once the term expires, you have the option to renew your policy to extend its coverage or convert it to a whole life insurance policy. Such is crucial as the death benefit will not be paid out if the policy expires before the death of the policyholder.
A life insurance annuity works slightly different in that it operates similar to an income. Whereas the whole and term life insurance policy provides a lump amount of money as a death benefit to beneficiaries, the life insurance annuity will provide the death benefit over a certain period. You can choose to have a fixed-period annuity for a specific period or a lifetime annuity.
In 2019, the percentage of Americans having life insurance policies is fifty-seven, and though this percentage represents the majority, there is still tremendous potential to capture a broader market.
There are several benefits to getting a life insurance plan early in your life to have that extra guarantee and security. You may be overwhelmed at first, but once you are familiar with the insurance plans, you will be able to find the right policy for you!