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Types of Life Insurance

Term life insurance. Term life insurance is a type of life insurance that covers you for a specific amount of time, usually 10 years or more.

Permanent life insurance. Permanent life insurance, such as whole life, universal life, and discretionary universal life, does not expire.

Coverage based on your unique needs

The most popular forms of life insurance are divided into two groups:

Term life insurance

Term life insurance provides coverage for defined periods of time.

Permanent life insurance

In most cases, permanent life insurance has coverage that does not expire. Whole life, universal life, and discretionary universal life insurance are also common policy categories.

TERM LIFE INSURANCE

Coverage for a defined period of time

If you have a temporary requirement for coverage, a small budget, or a specific business application, consider term life insurance.

Limited time period. The primary goal of term life insurance is to pay out money (referred to as a "death benefit") if the covered person dies within the service period, which is usually 10 years or longer. After the policy expires, you will get no incentives.

Cost-effective. Term life insurance is the least expensive choice as compared to all forms of life insurance.

Return of premium (ROP). ROP term life insurance is a form of term life insurance that is exclusive. This form of scheme allows you to obtain a refund of all premiums charged at the end of a specified term.

PERMANENT LIFE INSURANCE

Whole life insurance

When you want a permanent "death bonus" and a "cash value," buy entire life insurance. The fund paid out on a life insurance policy when the covered individual dies is known as the permanent death payment. The cash value of the policy is the amount of money available to you for borrowing or deposits that accumulates over time. Keep in mind that taking out debt or withdrawing money from your account could minimize your death benefit.

Universal life insurance

Consider compulsory life insurance if you want to be able to adjust the worth of the policy's proceeds (death benefit).

When the insured dies, you get a lifelong death payout, similar to entire life insurance. You may choose between a policy with either a death benefit or one with both a death benefit and the chance to gain cash value with universal life. The insurance agent determines the interest rate at which you collect cash equity.

Variable universal life insurance

When you wish to spend the cash value of your policy in equity and bond fund portfolios, consider variable universal life insurance, another form of fixed life insurance. If the insured dies at any age, you will get a death payout, much as with entire life insurance. You stand a better chance of accumulating a greater cash value by betting in the stocks than you can for whole life or universal life insurance. Consult a financial planner to assess your trading time frame, risk tolerance, and whether it makes sense for you to spend your cash worth in stocks or bonds.

LIFE INSURANCE RIDERS

Many life insurance plans may have riders, which are add-ons to the base coverage and include additional features and benefits. A long-term care rider is an example of this.

Long-term care riders on life insurance

Specialized services, such as nursing homes, assisted living, or in-home care, is a huge expense for most Americans over 65. The majority of households do not adequately budget for long-term care costs. A wealth management specialist will assist you in making plans to secure your investments while also easing the burden on family members who are caregivers.

Adding a rider on a permanent life insurance contract is a cost-effective way to buy long-term care insurance. When you are unable to perform two of the six basic Activities of Daily Living (ADLs), such as feeding, washing, dressing, toileting, transferring, and continence, the long-term care rider pays you benefits.

Consult with a financial planner to see if adding a long-term care rider to your life insurance policy makes sense for you.

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