TYPES OF LIFE INSURANCE
Term Life Insurance: A form of life insurance which provides coverage for a specified period of time and does not build cash value.
Term insurance is often referred to as "pure insurance." Term policies provide life insurance coverage for a specified period of time. You can typically buy term insurance for periods ranging from 1 to 30 years. If you die during the policy period, your beneficiary receives the policy death benefit. If you don't die during the term, your beneficiary receives nothing. At the end of the specified policy term, your coverage simply ends. You may be able to renew your policy without a physical exam. Once you reach a certain age (usually 65 or 70), you may find it difficult to get term insurance coverage for more than one year--and the premiums will be expensive. You may also find it difficult to get term insurance coverage if you develop a medical condition.
Cash value insurance: (often called "permanent insurance") combines death benefits with a savings component (the cash value). As long as you continue paying your premiums, cash value life insurance continues throughout your life, regardless of your age or your health. As you pay your premiums, a portion of each payment is set aside to create the cash value.
See following examples:
Whole Life Insurance: A life insurance policy that remains in full force and effect for the entire life of the insured, provided that premiums are paid.
Universal Life Insurance: A form of permanent cash value life insurance that provides both life insurance protection and a savings component with a guaranteed minimum rate of return, plus an additional return when the insurance company's investments perform well. Other key features include the ability to adjust both your premium payments and the amount of your insurance coverage.
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