There are two main types of life insurance policies available. The first is called a term life insurance policy. This is when you select a period for which you will be covered under a life insurance plan.
The benefits to a term life insurance plan is that it is generally less expensive than permanent life insurance. A downside to term life insurance is that you will only get paid if you die during the term of insurance. When your coverage term ends, you must either buy a new policy or extend your existing one. It is possible to convert your term insurance policy into a permanent policy, but you will need to speak to your life insurance agent if this is possible.
Another kind of life insurance available for purchase is called permanent insurance. As the name implies, this is a permanent form of life insurance that covers you throughout your life. You will get a payment from this policy regardless of the time of your death. There is no period of coverage as there is with a term life insurance policy.
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One of the major benefits to a permanent insurance policy is that it builds a cash value over time. The value of the permanent insurance policy can then be used to borrow money against it. This can come in handy if you need to take a loan out for a home repair or medical expenses. You might even be able to withdraw money from the policy’s cash savings value.
Permanent life insurance policies have higher premiums than term life insurance policies. The rate does remain locked in however, while the rate for a term life insurance can increase if you choose to renew it. There are also variations in permanent life insurance such as whole, universal and variable types.