Even though an overwhelming majority of people (93%) feel that having a life insurance policy is completely necessary, an underwhelming amount–about 95 million, which is 41% of the population–don’t have one!
A big reason why so many people don’t have a policy is because they don’t fully understand the different life insurance types. Basically, there’s two main categories of life insurance: whole life insurance and term life insurance. Once you understand the differences between the two, you’ll find it’s fairly easy to purchase this vital commodity.
The intention of a whole life insurance policy is to cover you and your loved ones for the rest of your life, as the name implies. Initially these policies cost more, but the payments taper off in the later years making them cost-efficient. Sometimes referred to as “permanent life insurance” or “traditional life insurance,” it’s the kind of policy that most folks typically purchase.
A term life insurance policy offers you and your family protection for a limited amount of time, which is usually about 20 years. If the premiums stop being paid, the insurance also stops. The only way a person benefits from term life insurance is if her or she passes away during the policy’s period, since it doesn’t accrue a cash value. These short term policies are good for people who only want life insurance for a limited amount of time, to ensure that they’re loved ones are financially protected and their financial responsibilities are tended to.
Each has its own advantages. You can convert a whole life insurance policy’s cash value into an annuity or into cash. Plus, you can add a provision to the policy that lets you have the option of purchasing additional insurance without needing another medical exam or evidence of insurability. On the other hand, a term life insurance policy’s premiums are generally cheaper. Plus, it doesn’t have required premium levels, making it easier to buy the necessary amount of protection.
The key to getting the best life insurance policy for your situation is to understand the two different types. If you have any questions about life insurance policies, feel free to ask in the comments. More can be found here: buylifeinsurancecanada.ca
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