At Care Financial, we want our clients to be fully informed about their options when it comes to financial planning, insurance, retirement and more. Before you can accurately weigh your options, you have to understand exactly what you’re getting into. When it comes to life insurance in particular, we’ve got your back. If you’ve been feeling overwhelmed about your options, or you’re just interested in learning more about life insurance in general, we recommend you read on.
What is Life Insurance?
First things first, we need to understand exactly what life insurance is and why we need it. The purpose of life insurance is to pay a designated person money upon the death of the insured. This contract is legally binding and is paid for through monthly or yearly payments, known as premiums. The beneficiary of a life insurance policy is the person chosen to receive the death benefit, or sum of money. Now that we understand the general idea of life insurance, it is important that you understand there are different types of insurance.
Whole Life Insurance
Whole Life Insurance is a form of life insurance that never expires. This insurance lasts for the whole life of the insured. As a result, there are many pros and cons. Some of the benefits of whole life insurance are that the premiums remain fixed, policies can earn dividends and they build cash value. The cons to this type of insurance are that it is expensive, is not as flexible as other options and takes a while to build cash.
Term Life Insurance
Term Life Insurance differs from Whole Life in that it is active for a set period, usually between 1-30 years. Additionally, you can cancel this insurance policy before it expires without losing value on it. This form of insurance is much more affordable and benefits those who expect to accumulate wealth over time and do not foresee the need for a financial safety net later in life. Term Life Insurance is more flexible than Whole Life and is often more simple in terms of policies and options. The cons to Term Life Insurance are that it does not build up cash value and becomes more difficult to secure as you age.
If you find yourself with more questions when it comes to life insurance, or you’re ready to talk about finding the right policy for you, we are here to help! At Care Financial, our consultants can go over both options that are essential in helping you make your decision when choosing the right type of life insurance policy for you and your family or business. Give us a call today to learn more at 251-633-7122.