Choosing the Appropriate Type of Life Insurance
Cash Value Insurance combines death benefits with a cash value accumulation feature
- Insurance to provide financial protection and security for surviving family members upon the death of the insured person.
- Insurance to cover a particular need such as paying off a mortgage or other debt upon the insured’s death.
- Business insurance to compensate a company on the death of a key employee or to provide a surviving partner the resources to buy out the deceased partner’s share of the business.
- Insurance to provide funds to pay estate taxes or other final obligations necessary to settle a deceased person’s estate.
- Insurance to provide the funds necessary for the deceased person’s burial expenses.
There are two basic types of life insurance: Term Life Insurance and Cash Value Life Insurance. There are many policy variations between these two types of life insurance. Term Policies provide life insurance for a specified period of time. This period could be as short as one year or provide coverage for a specific number of years such as 5, 10, 20 years or to a specified age.
If you live beyond the term period you had selected, no benefit is payable. As a rule, term policies offer a death benefit with no savings element or cash value. If you have a limited amount to spend, and only need insurance for a specified period of time, you may be able to get more coverage by buying term insurance than by buying cash value insurance. Read more