Sometimes be a sensitive topic. We all know that the life we have is temporary, and you will not be able to be with your family. That does not mean that your family has to suffer the financial burden of your absence. That is why many people choose to invest in life insurance as a way to save your family’s wallet.
It is a great idea if you want to provide financial security for your family. Final expenses like paying for funeral directors, abolishing outstanding debts and other day-to-day expenses will be covered through a life insurance policy. There are different types of life insurance policies and the benefits your family will reap depend on the type you get. Let us break that down.
Term Life Insurance
Term life insurance covers your life through a certain timeframe. Just like your car insurance, you can buy life insurance that can span over 20 to 30 years. You will pay a monthly premium and if something tragic happens, like an early death, your beneficiaries will receive the payout. There are a few reasons why term insurance is a great option, depending on your circumstance.
Typically, term life insurance has lower monthly premiums because the insurance companies assume less risk since you are only insured for a certain amount of time. The younger and healthier you are, the lower your premiums will be.
Term life insurance is also flexible. You can pick and choose how long you want to be covered under that policy. You can pick a policy that fits your needs. This makes it easier for you to predict how much you will pay in premiums over the course of the term.
Another great pro is that you are always able to convert it from a term life insurance policy to a permanent life insurance policy. Though this may drive the prices of your premiums up, it may still be a good idea since you will have coverage for life. You could also have the option to collect cash value from your life insurance policy.
Permanent Life Insurance
Permanent life insurance covers you for as long as you pay your premiums. Not only will you be covered, but there are also some life insurance policies that you can purchase that give you an investment component along with it. This investment component allows your policyholders to receive the cash value.
When you take advantage of the investment permanent life insurance policies, you have the option to have tax-deferred growth of wealth which essentially means you will not have to pay taxes on interests, dividends or capital gains on the cash-value of your life insurance policy until you decided to take out the proceeds.
In addition, you will have lifetime coverage. You do not have to worry about losing your coverage after a certain timeframe. This is a great option if you have people that depend on you beyond the length of a typical term policy.