Life insurance primarily refers to a legally binding contract between a policyholder and an insurer, whereby in exchange for making premium payments, the insurer guarantees payment of a death benefit. However, life insurance does not peg on your death only. You can be smart and choose a type of life insurance that also serves as an investment plan. Here are two major types of life insurance.
Term Life Insurance
Term life insurance is among the most affordable and straightforward types of life insurance, which can quickly help to ease any financial burden, especially upon your demise. The valid term of the policy is generally between one to 30 years. In case you happen to live beyond the stipulated period, the coverage ceases to apply. However, the policy terms of some companies that offer life insurance Newark DE may allow you to convert term insurance to a whole/universal life insurance upon expiry of the agreed period.
Whole Life Insurance
Whole life insurance is also known as permanent life insurance. Without the limitations of term insurance, whole life insurance offers lifelong coverage with no timeline limitations. It is considered an actual investment plan, and loans can even be taken against it. Additionally, compensation is paid to named beneficiaries. There are two options within whole life insurance. These are universal life insurance and traditional whole life insurance. The structure of universal life insurance is usually more flexible, including the fact that you can make premium payments at your convenience.
The different types of life insurance provide you with an array of options. For instance, term coverage can be affordable, and your loved ones can use the lump sum received to settle outstanding bills like mortgage, debts, car loans and education expenses. Whole life insurance generally does not come with timeline limitations, and it benefits your dependents.
Life comes with uncertainties. Therefore, it is recommended that you seek out life insurance.