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Life insurance is a type of insurance policy that pays a lump sum of money to the insured person or their beneficiaries if the insured dies.
The purpose of life insurance is to provide financial stability and protection for someone’s family and loved ones in the event of their passing. It can also be used as an investment vehicle for those who don't have other sources of income.
Life insurance policies come in various types, such as term life, whole life, universal life and variable universal life. The type that suits you best will depend on your current situation and future needs.
In the US, life insurance is a necessity for most people. The complexity of these policies can be a little overwhelming.
In this section, we will break down the different types of life insurance policies and provide an overview for each one.
Term Life Insurance: Term life insurance provides coverage for a specific period of time or until a specified age. The policy will expire at the end of this time period or when the insured person reaches the specified age, whichever comes first.
Permanent Life Insurance: Permanent life insurance has no expiration date but is often more expensive than term life insurance policies because it usually provides coverage over your entire lifetime.
Universal Life Insurance: Universal life insurance offers protection for both temporary and permanent needs by combining term and permanent coverage into one package.
The first step to choosing your life insurance policy is to determine how much coverage you need. It’s important to understand that there are different types of policies and each one offers different levels of coverage. You can get an estimate on how much life insurance you need by using the Life Insurance Needs Calculator.
The best way to understand how much coverage you need is to look at the three different coverages available.
There are two types of car insurance: liability and full protection. Liability insurance covers for damages caused by the driver’s negligence or recklessness. Full protection coverage provides all-round protection for your car, which includes collision, comprehensive and theft coverage.
Your home insurance also have two types of coverage - contents and buildings. Contents is just what it says on the tin - it covers your items inside your house for damages caused by fire, water leakage or burglary. Buildings cover damage arising from natural disasters like floods or earthquakes as well as vandalism, theft etc.