Laws and practices for life insurance coverage vary from state to state. There are two basic types of life insurance you can purchase. Both of these are available at Independence Insurance Center in California.
Term life insurance provides coverage for a specified amount of time. The terms usually are 5, 10, 15, or 20 years. A specific age can be used to end the term as well. If the policyholder dies during the term period, the insurance company will pay their beneficiary the amount agreed upon with the policy. After the term period is over, there is no coverage. The policyholder can reapply for term insurance. The rate will likely be higher with advancing age, however.
Term insurance has two premiums. Current premiums are the amount you are currently paying. Maximum premiums are the most the insurance company can charge you under the policy. Ideally, you should be able to afford the maximum premium if necessary. This provides a safety net in case the company decides to raise its premiums.
Cash value insurance works a little differently. The premiums are usually higher than term life insurance, and part of what you pay in premiums goes into a cash-value account. Most companies permit loans against the cash value account, and you may be able to withdraw your cash value if you choose as well. However, this could lower your beneficiary payout by the amount that you withdraw.
Whole life is one form of cash value insurance, and it's the most common. It is designed to be paid throughout your life. Universal coverage is more flexible, because premiums, cash value, and death benefit are viewed separately instead of as one package. With variable life insurance, your death benefit is determined partially by the rate of return of underlying assets for the policy. Lastly, variable universal combines the features of variable and universal insurance plans.
If you would like to know more about which type of life insurance can help protect you and your loved ones, contact us at Independence Insurance Center in California.
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