Life Insurance: Benefits and Types
Selecting your life insurance policy can be time-consuming. Picking a plan depends on the costs and the type of insurance policy you want. The coverage will protect your loved ones. You can decide on the beneficiaries who will receive payment from the insurance company. This article discusses the benefits and types of life insurance policies.
Benefits of Life Insurance
Life insurance can cover costs after your death and build wealth. Here are some of the benefits:
- Covering Emergency Costs
Life insurance covers funeral expenses, medical bills, estate taxes, and student debts. Also, the insurance policy pays for other debts that remain after death. A life insurance policy ensures your family members don’t worry about paying these costs.
- Covering Living Expenses
If you’ve family members depending on your income, your life policy can replace the income. The amount of time the plan covers your income varies according to your insurance policy.
You can select a guardian for your children. The life insurance policy payout can provide for the expenses of raising children. The costs include medical expenses, basic living costs, or college tuition fees.
- Leaving Money for Different Causes
Policyholders can choose ways of dividing their life insurance benefits. The payments can go to multiple people, including children and spouses. Also, you can decide to use the money to provide funds for colleges, pay off mortgages, and donate to charity.
- Building Wealth
Some categories of life insurance allow policyholders to invest. The investments will allow you and your beneficiaries to build wealth. Also, you can transfer wealth or take advantage of tax breaks. Some life insurance policies provide tax-free benefits.
- Securing Debt
Lenders can use your life insurance policy as security when you secure certain debts. For instance, Unity Financial Life Insurance Company policyholders can get a mortgage from lenders using a life insurance policy as security.
Types of Life Insurance
The types of life insurance policies include;
- Term Life Insurance
You purchase a policy for a specific length of time(term). The tenure ranges from ten to thirty years. People can change the policy term. The policy doesn’t have cash value. At the end of the term, it expires not unless it’s convertible. It’s the most affordable life insurance policy.
- Permanent Life Insurance
The permanent life insurance policy is for life, and its types include;
Whole Life Insurance
If you keep on paying premiums, the whole life insurance plan is valid. It builds a cash value that you can get through withdrawals. The plan consists of set premiums.
Universal Life Insurance
The universal life insurance plan provides investment options for policyholders. The premiums can change over time depending on your investments’ cash values. You can also borrow from the insurance policy.
Combination or Convertible Life Insurance
Combination life insurance can vary slightly from term and permanent policies. The plans provide options to get payouts in other circumstances apart from death. More policyholders select life insurance plans that combine other coverage like long-term care policies. Convertible life insurance can allow policyholders to buy term insurance policies and later convert them into permanent life policies.
You can use life insurance to cover costs after death, secure credit, and build wealth. A life insurance policy can be term or permanent.