You want to make sure that your family is taken care of when you are gone, and one of the easiest and best ways to do that is to get a life insurance policy. Having such a policy can provide you and your loved ones with financial protection and a number of benefits.
What is it?
A life policy is a type of insurance policy that provides financial benefits to beneficiaries when you pass away. It is one of the few types of insurance policies where the benefits go to a beneficiary other than the insured person.
Who is it for?
Anyone can benefit from a life policy, and such policies are a good idea for anyone to have. However, there are certain groups of people for whom life policies are especially important. These include single parents, single wage earners in a household and anyone who is caring for a vulnerable adult and/or minor children.
How does it work?
Depending on what kind of policy you have, you life insurance will cover you either for a set term or for as long as you make the premium payments. When you pass away, the policy will pay out the death benefit to your named beneficiaries. Some policies also may accrue cash value that you can take a loan against or cash out at some point, and some policies also may allow you to tap the death benefit while you are still alive.
There are two main types of life policies: permanent and term. Permanent policies stay in effect for your entire lifetime as long as you continue to make the premium payments. Term policies have a specific term, such as 20 years, during which they are in effect. Once the term is up, the policy ends, even if no benefits have been paid out.
The main benefit of having a life policy is ensuring a financial payout to your loved ones when you are gone. An additional benefit is that life policy payouts are exempt from income taxes, which means your loved ones will receive the entire benefit.