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Life Insurance Explained

Authored By: Stacey Zimmerman

Most people generally understand that life insurance is necessary. Your life insurance policy is a method of protecting your family after your death. However, many may not understand the various types of life insurance that are available today.

Whole Life Insurance is an insurance protection policy that will remain in effect, as long as you continue to make the premium payments. One of the major benefits of Whole Life Insurance is that you will be able to build cash value on your policy and it will be on a tax-deferred basis. This works by having a percentage of the premiums that you pay put into a savings that the insurance policy invests. Any interest earned is added to this savings and it will build cash value. If this cash value gets build up enough, you may to have to continue to pay premiums after you reach a certain age or you may be able to borrow against the cash value.

Another major benefit to Whole Life Insurance is that the premiums will not change. You’ll never have to worry about premium jumps as long as you pay them on time and if you borrow against the cash value, you simply have to repay the policy loan.

The downside to Whole Life Insurance is that you have no control over how the insurance company invests your premium dollars.

Term Life Insurance is an insurance protection that you select for a specific time period. If you die within this specific time period, your family would receive a lump sum of money, as specified in the contract. The premiums on Term Life Insurance is lower than other types of life insurance as it does not build a cash value, meaning you can not borrow against the policy.

One downside to Term Life Insurance is that each year, when your policy can be renewed and the premiums can be increased. Under this type of policy, the premiums simply increase year, making it more expensive for this coverage. However, it does provide complete protection for your family.

There are other types of life insurance, as well, such as Variable Life insurance. This will allow you to be more involved in the investing of your premium dollars. Variable-Universal Life Insurance will offer more flexibility and the possibility of increasing the cash value depending upon how the investments perform.

The most important thing for you to remember about life insurance, however, is your need to protect your family in case of your death. While most policies will do this, you will need to talk with your life insurance agent about all of your options and consider all the expenses, including your children’s education, healthcare, and other costs that may be incurred should you die.

Make sure you compare costs on life insurance policies and guarantee that your family will be covered and taken care of upon your death.

Copyright 2006 Stacey Zimmerman

Stace Zimmerman is the owner of the insurance quote site www.freeinsurancequotes.us . He is the author of many articles on all types insurance, including health, life, auto, home car & long term care insurance. Visit his site for lots of insurance articles.

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