Life Insurance

What is Life Insurance?

Life insurance helps people prepare for the end of their lives, offering people a way to provide for loved ones they leave behind. Because death is one of the few sure things in life, this is a form of insurance that most people should at least consider getting.

At the heart of life coverage is what’s known as “death benefits.” These benefits are normally distributed upon a policyholder’s passing, according to their wishes. In most cases, recipients can use these benefits for almost any legal purpose. Frequently, they’re used to:

  • Ensure dependents are able to maintain their quality of life
  • Fund college for loved ones
  • Cover outstanding bills or debts that the policyholder had
  • Pay the policyholder’s wake and funeral expenses
  • Assist with any other financial struggles beneficiaries face

Some life coverage also includes investment options, which may be used to help fund a policyholder’s retirement. Not all life policies have such options, though.

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Life Insurance

What Types of Life Coverage Are There?

Most life policies fall into one of two categories. They’re either term life policies or whole life policies. While both types of policies provide death benefits, their structures are significantly different.

Term life policies are structured to provide coverage for a set number of years, or a term. Most terms are between 10 and 30 years. During a policy’s term, the policyholder must pay premiums in order to receive coverage. After a policy’s term, coverage ceases -- but so do premiums. In general, term premiums are fairly low and remain low throughout the duration of a policy’s term.

Whole life policies are normally designed to provide life coverage for the remainder of a policyholder’s life, however long that may be. They generally don’t have a date on which benefits expire. Whole life policies’ premiums also don’t cease on a specific date, but the policies have another means of dealing with premiums.

Most whole life policies’ actually increase over time, and the payments can become high later in life. These policies, however, also have investment vehicles built into them that usually increase in value over time. As the investments inside a policy grow, the interest they generate can be used to pay the policy’s premiums. In many cases, the interest generated by investments eventually exceeds a policy's premiums -- essentially making a policy free even though there are still premiums to be paid.Life Insurance

Are Term or Whole Life Policies Better?

Term and whole life insurance policies both have their uses. Neither is truly better than the other, but they each should be used in different scenarios.

Term life policies are generally a good investment for people who simply want to make sure their family will be taken care of if they pass away unexpectedly during their working years. The lower premiums are affordable even when raising a family, and policyholders can stop paying the premiums when their policy’s term is up. By this time, hopefully, any children a policyholder has will be financially independent, and they and their spouse will have enough savings in another account to provide throughout retirement.

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Whole life policies are useful for people who want to save up for retirement within their policy. People who like the convenience that these policies offer and are comfortable with the investment choices they provide might not need to invest through another account.

Whole life policies are also wise choices for people who need to ensure a handicapped or disabled loved one will be cared for after their passing. Because these policies usually never expire, policyholders can make sure a loved one who needs extra help will have the financial resources to pay for the assistance they need no matter when a policyholder passes away.

How Can People Get Quotes for Life Insurance?

People who would like help deciding whether to get term or whole life insurance, and requesting quotes, should contact an independent insurance agent who serves their area. An independent agent can explain the benefits of each type of policy, and they can quickly request quotes for either form of life coverage from multiple insurance providers.

Meet Your Industry Specialist

Brian Millinger

Mr. Millinger is a financial services professional with 16 years experience. Brian stresses creating long-term working relationships and his passion is to ensure that his clients' financial decisions meet their goals and objectives. He is there for his clients as their lives and objectives change over time.

In his spare time, Mr. Millinger volunteers in the Veteran Community and is a board member of Project Empower, a division of Jewish Family and Children's Services of Philadelphia. Brian also enjoys coaching his kids sports teams.

Mr. Millinger resides in Huntington Valley, Pennsylvania with his wife and children. They enjoy sports, traveling, and spending time with friends and family.

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