One of the best steps that many individuals can take today to provide for the financial future of their loved ones is to invest in a life insurance policy. While there are several different types of life insurance policies that can be purchased, all of these policies generally provide the named beneficiaries with a lump sum of cash when the insured passes away. These policies may be purchased with customized values, and they may be for a few thousand dollars, hundreds of thousands of dollars or more.
The two main types of life coverage policies are term life and whole life policies. With term life, the coverage remains in effect for a specified period of time, such as 10, 20 or 30 years. At the end of the term, the coverage ceases. This is among the most affordable types of coverage available. With whole life, the coverage may remain in effect for the lifetime of the insured, provided the policy is not canceled and the premium is paid. These policies may also accrue cash value, and they may be considered a financial asset for this reason. However, they can be more costly than term life policies.
The main benefit associated with a life policy relates to the cash disbursement that is provided to beneficiaries upon the death of the insured. This cash disbursement may be used to pay off a home mortgage and other bills that the loved ones may be responsible for, and this can make it easier for the loved ones to live their lives without the income of the deceased. The cash disbursement may also be used to fund living expenses or major expenses, such as a childs college education. Whole life policies may also be used to provide loved ones with inheritance, to borrow against for investment plans or for other related purposes. There are many different ways that different life policies may be used. One of the best steps that individuals can take when purchasing a new policy is to determine what their needs are and to find a policy that most closely meets those needs.