Life insurance is the safety net that protects your family financially if you can’t be there to support them any longer. With life insurance, a lump sum of money will be paid to your beneficiaries upon your death. The money can be used for funeral expenses, to replace your lost income, pay outstanding bills, fund your child’s college education and more.
There are two basic types of life insurance:
Term life insurance offers life insurance coverage for a specific period of time, typically up to 30 years. Whole life insurance, or permanent life insurance, is a policy that is in place for your entire lifetime. Whole life insurance also includes a savings component, which helps grow your money tax-deferred. After a specific amount of time, that money can be used to pay premiums, used as a loan or as added death benefits for your beneficiaries. Learn more about the benefits of life insurance.
A third type of life insurance that is common is no medical exam life insurance. No medical exam life insurance is a policy that does not require a medical exam, and the policy can be secured in as quickly as 24 hours. Term life and Whole life insurance policies require a medical exam.
Life insurance is an important financial tool that everyone should have. The most important reason to buy life insurance is as an income replacement tool. If you have dependents that rely on your income to pay bills and support them, life insurance can help to replace your income. Other ways life insurance can help is to pay for funeral expenses, make charitable donations, pay federal and state “death” taxes and so much more.
Learn more about the differences between term and whole life insurance here.
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