An Introduction to Life Insurance

Modern insurance companies offer a wide range of life insurance policies to meet the needs of a variety of people. The two most common types of policies are term life and permanent. A term life policy pays out its face value only if you die during the term. For example, a $500,000 term life policy with a ten-year term will pay your family $500,000 if you die within the next ten years. The simplest form of a term life policy requires you to make equal premium payments throughout the term. This is known as a level-premium term policy, and it is the type of policy that we will quote for you at this web site.

A permanent policy pays out its face value whenever you die. In the early years of a permanent policy, you will pay higher premiums than would be necessary to buy a term life policy. These early overpayments are used by the insurance company to keep the later payments reasonable. Otherwise, as you grow old, your term life insurance premiums would skyrocket. Level-premium permanent policies require annual payments for your entire life, while limited-pay permanent policies require annual payments for a projected period of years.

Life insurance is a very important part of personal financial planning because it is the quickest and easiest source of cash for your family upon your death. Within days, the insurance company will deliver a check to your designated beneficiaries. This provides the money needed for funeral expenses, as well as for family living expenses.

Young and middle-aged people generally use term life policies to cover expenses that will terminate as they grow older. Term life coverage is often purchased to provide a college fund, income for a surviving spouse, or repayment of the mortgage. For example, if your children will be educated and independent in another 13 years, then a 15-year term life policy will provide for them, even in the event of your demise. Most insurers offer term life policies only at standard durations of 5, 10, 15, 20,25 and 30 years allowing people to match the policy term with their family needs.