Considering life insurance? Here’re the basics.
When buying life insurance, you may be overwhelmed by the plethora of information available. To protect your future from poor choices today, organize your insurance by learning about the basics of life insurance!
Life Insurance 101
As the owner of a selfless insurance policy, you will never actually get to benefit from your life insurance. Your policy is designed to protect your family and finances. When you’re no longer around to provide for your family, life insurance helps your family cover your funeral costs, pay off remaining debt, and can even be used for your spouse to retire as planned or your child to go to college.
This provides life insurance protection for a specific length of time at a fixed rate (5 years, 10 years, 20 years). If you were to die during the provided coverage time, term policies pay out in a lump sum to the beneficiaries. The young and healthy can benefit from securing a fixed term and enjoy low premiums – so don’t wait!
This is otherwise known as a permanent policy. It is not defined by a specific term length, but it pays a guaranteed benefit to your beneficiaries when you die, and generally accrues a cash value over time through interest. This policy is exempt from income tax and the premiums normally stay the same over your lifetime. The cash portion can be withdrawn for an investment such as your kid’s college education, your spouse to retire on time, or to pay off the mortgage. For those with higher financial burdens, this is significantly valuable.
This is referred to as a flexible premium or adjustable life insurance. It’s not limited to a set term and usually has cash accumulation too. In this policy, the premiums, cash values, and coverage limits may be increased or decreased during the lifetime of the policy. Usually, the adjustments can be made after life milestones or as your needs change.
Having trouble deciding on what policy is best for your family, budget, and needs? Contact the insurance experts at the Insurance Agency of Dean Davis to find the best life insurance policy for you in Austin, Texas.