The best way to find the right life insurance policy is to compare the benefits and costs of different plans. To do this, you need to understand a few key terms. These refer both to the types of life insurance available and to various details you sould pay attention to when looking at policies.
Term life insurance: Term life insurance expires after a set amount of time. This is a very popular form of insurance because it is cheaper than other types of insurance.
Permanent life insurance: This is insurance that lasts until you die, as long as you keep up with the monthly payments. It is more expensive than term life insurance and includes a cash value component.
Whole life insurance: This is a type of permanent life insurance that includes a cash value component with a fixed interest rate.
Tax-deferred: If a life insurance policy is tax deferred then you do not have to pay taxes on it until you withdraw the cash value.
Death benefit: This is the amount that is paid to your beneficiaries if you have a life insurance policy when you die.
Beneficiary: These are the people who receive your death benefit. They usually are your dependents, such as your spouse and children but they can be anyone hat you select.
Premium: This is the regular bill that you pay in order to maintain your insurance policy. Usually premium payments are due every month.
Cash Value: This is a savings account that is included in permanent life insurance policies. It functions like a savings or investment account and becomes tax-deferred over time.
Now that you can identify these key insurance terms, it will much easier to understand the best type of insurance for you.
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