A life insurance policy is an agreement between you and an insurance company. Through paying a regular premium, your insurance company agrees to pay out a sum of money to your beneficiaries if you were to pass away before the policy term has ended.
Depending on your needs, you may require a different type of life insurance.
Some types include:
Term Life: Your policy is for a specific term only, say 10 to 30 years, and your beneficiaries don’t receive any benefit if you outlive the set term. Your premiums can be level, increasing or decreasing throughout the life of the policy.
Accidental Death: Similar to Term Life, your policy is for a specific term, but only pays a benefit in the event of accidental death, such as a traffic accident. Death from illness is not covered, so accidental death policies tend to be the least expensive option.
Whole Life: Your policy is for the entirety of your life, and there is a cash value component from which you may borrow or withdraw in the future. You pay level premiums throughout the life of the policy, which is your entire life.
Universal Life: Similar to Whole Life, this type of life insurance is for the entirety of your life and includes a cash value account. However, some universal life policies offer flexibility. For example, you can use your cash value account to help pay your premiums if need be.
