What is the Best Type of Life Insurance For You?

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Life insurance, as they say, is not for you but is for the benefits of those whom you leave behind after you die.  It is to protect the family and dependents in the event of the policy holder's untimely, accidental or inevitable death. As a component of planning for the future, life insurance reflects how much a person cares for his/her loved ones.

There are many options with coverage, depending on one's situation.  The main categories of life insurance are described below:

(1) Term Life:

Term life is the simplest and least expensive type of insurance policy. It has no cash value and has only one function: to pay a specific lump sum to whom so ever you designated, upon a specific event-your death.

(2) Whole Life:

 Whole life insurance provides financial security for your dependents while building cash value that increases over time.  It pays a death benefit to the beneficiary you name, .provides a fixed premium which can't increase during your lifetime, gives you the option to receive dividends from your policy or apply them to reduce payments, and offers you the right to withdraw from the policy during your lifetime.

(3) Variable Life:

 Variable life insurance provides permanent protection for you and is the type of life insurance with account flexibility for the more risk-oriented policy holder.  It pays a death benefit to the beneficiary you name and offers you low-risk, tax-free cash accumulation, allows the death benefit to vary based on returns of the cash value account, and lets you  borrow from the policy during your lifetime.

(4) Universal Life:

 Universal life insurance provides permanent protection for your dependents and is more flexible than whole or variable life.  It pays a death benefit to the beneficiary you name and offers you a low risk cash value account and tax deferred accumulation, allows you to earn market rates of interest on your cash value account, offers the right to borrow or withdraw from the policy during your lifetime.

(5) Universal Variable Life:

Universal Variable life is the type of insurance which gives you more control of cash value account policy features than any other insurance type.  It pays a death benefit to the beneficiary you name and offers you low risk tax deferred cash value options, offers separate accounts for you to invest in such as money market, stock, and bond funds.

It lets you withdraw or borrow from the policy and offers premium flexibility and also allows you to make withdrawals or to borrow from the policy during your lifetime.  However, in case you decide to terminate the policy early, its cash value diminishes.

On the negative side it is not good for small premium to cover your insurance and accounts and requires policyholder to find time to manage accounts.

Why and Who Needs Life Insurance?:

 A life insurance policy would take care of the financial responsibilities one leaves behind so family members do not become a burden on the relatives or dependent on the government. The benefits from a life insurance policy will go directly to the beneficiaries, without any legal hurdles.

Life insurance is a must if you are married or have a life partner.  Owning a business, having children, dependent and disabled parents add more arguments to have one.  It even helps if you have a mortgage and considerable debt obligations.

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