Did you know that only about 50% of Americans have life insurance policies? Are you curious as to when you should purchase a policy? Many people are afraid to speak about life insurance policies because of the grim topic of death, but that conversation is necessary.
If you wonder what the different types of life insurance policies there are, you came to the right article. We will go over what life insurance is and the importance of protecting your family when you pass away!
What Is Life Insurance?
Just like you have insurance for your car, there is insurance for your life. Life insurance policies financially cover your beneficiaries in the event of your death. Your listed beneficiaries can either be your spouse, your children, or anyone else that you want to receive the benefits.
It is vital to get a life insurance policy as soon as possible, especially if you are a very healthy individual. There are several different types of life insurance policies that you could choose from, and they all offer different types of benefits.
Term Life Insurance
Term life insurance is considered cheap life insurance. The main reason why these policies are the least expensive is that this policy only pays your beneficiaries when you pass away.
The amount that life insurance companies will pay to the listed beneficiaries is a fixed amount of money that you set when you first purchase the policy. It is recommended that you buy a term life policy that is about ten to twelve times your annual income to ensure that your beneficiaries are entirely covered.
Whole Life Insurance
Whole life insurance is a permanent type of life insurance that does not expire. This policy has both a death benefit and a cash value. The cash value will accrue interest at a predetermined rate.
A portion of the premium that you pay per month goes into the cash value portion of the policy, guaranteeing you a rate of return. If needed, you can withdraw money from this policy once there is enough cash value accumulated.
Improving My Life Insurance Policies
Did you know that there is so much you can do with your whole life insurance policy? Private family banking is excellent when you are allowed to pull from your whole life policy. You will put that money into another account which provides a tax-efficient savings vehicle for you and your family.
You can do so without any interest if you need to pull money from that private family banking account. Family banking is good for anyone who wants to build wealth or improve their cash flow.
Learn More About Types of Life Insurance
Life insurance is a necessary purchase, especially if you have family that you will leave behind when you pass away. Not only can certain life insurance policies help your family when you pass away, but they also can help you and your family while you are still alive.
If you are interested in buying life insurance or want to know more about the best life insurance, check out our Finance section today! We have a lot of great information on different types of life insurance and how you can build wealth for yourself and your family.