Life Insurance Information
Life Insurance - it's not only used to provide a death benefit. Read this Investopedia article.
There are many kinds of life insurance, but they generally fall into two categories: term insurance and permanent insurance.
Term insurance is designed to meet temporary needs. It provides protection for a specific period of time (the "term") and generally pays a benefit only if you die during the term. This type of insurance often makes sense when you have a need for coverage that will disappear at a specific point in time. For instance, you may decide that you only need coverage until your children graduate from college or a particular debt is paid off, such as your mortgage.
Permanent insurance is designed to provide lifelong protection. Premiums can be fixed (as with Whole Life) or flexible (found with Universal Life products). Because permanent policies are designed to last a lifetime, these contracts accumulate cash value to defray the increasing internal costs to keep the policy in force. As a result, the death benefit may also increase as the account value grows due to on-going premiums and the crediting strategy of the policy. Here's a video from Ameritas describing how Index crediting works while protecting your principal: Hedging and Index Crediting.
Living Benefits may be a feature of Term and most often found in Permanent policies. This feature provides an ability to accelerate the death benefit payout in the event of a critical, chronic or terminal illness. State laws govern how these features may be offered or implemented. These accelerated benefits are distinctly different from Long-Term Care insurance, which should be considered to truly cover healthcare needs in retirement.
At times, you may own both Term and Permanent type policies as a practical measure. It's impossible to say which type of life insurance is better because the kind of coverage that's right for you depends on your unique circumstances and financial goals.
The best way to figure out the amount and type of life insurance that makes sense for your particular situation is to meet with a qualified and licensed life insurance professional.
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