Whole Life Insurance Vs Term Life Insurance
Life insurance is essentially a contract between a policy holder or an insurer or issuer, in which the insurer promises to cover a designated insured person a specified amount of money upon the insured person's death. Depending on the contract, sometimes even critical illnesses or terminal diseases can also cause payment to the beneficiary. Life insurance has been around for a long time. It was first popularized by the Social Security Administration during World War I because soldiers were allowed to purchase small life insurance policies. They were then able to use these policies to make final payments should they die.
One of the primary features of life insurance is that it allows the beneficiaries to use the policy as collateral. Once the policyholder passes away, the beneficiaries can access their money. Unlike other types of life insurance, permanent life insurance does not usually require a premium payment and has no minimum coverage limits. However, there are many differences between permanent life insurance and whole life insurance policies. One of those differences is that with whole life insurance, the cash value of the policy is invested, allowing the cash value to grow over time. Visit this insurance agent for life insurance policies.
Whole life insurance contracts offer the same flexibility of a variable life policy. As the name implies, the premium payment you make is tax-deductible. The contract may provide for limited liability, giving the beneficiaries the right to claim payment if the insured fails to pay the death benefit. There may also be fixed annuities, which have a guaranteed minimum income benefit and no flexibility within the contract. Unlike variable universal life policies, the premiums are guaranteed for the entire life of the policy, whereas variable universal life policies can vary according to the health of the insurance company and the stock market.
Another major difference between whole life insurance policies and variable universal life policies is that the premium payments are tax deductible. This means that in the case of death, there will be additional tax paid upon the cash surrender value of the life insurance policy. The premiums can be paid annually, semi-annually, quarterly, or monthly. Some life insurance companies may even allow for flexible premium payments, making it possible to adjust your premium payments to meet your family's needs. If you have an immediate need for funds and plan on leaving behind a loved one, whole life insurance policies can provide the financial protection needed to cover funeral expenses and other expenses incurred with the loss of your life.
There are several other differences between the two types of life insurance policies. A permanent life insurance policy is considered to be an asset, which allows the beneficiary to obtain loans against the policy without fear of defaulting on payments. Furthermore, unlike whole life insurance policies, a permanent policy is often not required to be repaid. Lastly, permanent life insurance policies often contain provisions that allow the policyholder to borrow against the policy. These can be used for debt consolidation, education, or business expenses.
Whichever type of insurance you and/or your loved one need, there are options available. Insurance brokers can help you determine what type of insurance you need and how much coverage you need at a price you can afford. With insurance prices continuing to increase, it is more important than ever to be prepared and know what steps you will need to take in the event of your untimely death. With life insurance, your loved ones do not need to worry about finances after you pass away, instead they can focus on helping you live a happy life with their lives. Read more about life insurance on this link: https://en.wikipedia.org/wiki/Life_insurance.
