In previous posts, we have touched upon many different aspects of Life Insurance, but today we will answer a really basic question: How does Life Insurance work?
Life Insurance is basically a contract between you and an insurance company. You agree to pay monthly premiums and the insurance company agrees to pay a benefit to your loved ones should you pass away.
Beneficiaries of a Life Insurance policy can use the proceeds in any way they see fit. They can cover expenses, save it, or use it to maintain their standard of living.
As we mentioned in a previous post, there are two basic types of Life Insurance policies:
- Term Life Insurance: Covers only a specific length of time that varies depending on the carrier.
- Permanent Life Insurance: Covers you during your entire life as long as you pay your premiums and it usually includes an investment account (cash value).
Choosing the Best Type of Life Insurance
Generally speaking, Permanent Life Insurance is more expensive than Term Life Insurance. So if you are looking for a less expensive option that covers you only during a period of time of particular concern (for example while you pay your mortgage), then Term Life Insurance may be the option for you.
On the other hand, if building cash value is important for you, you may opt for a Permanent Life Insurance policy. These are some of the most common types:
- Whole: It offers a death benefit and a savings account.
- Universal or adjustable: Is structured like a Whole Life policy, but offers more flexibility.
- Variable: Allows you to invest your savings account in stocks, bonds, and money market mutual funds.
- Variable Universal: Combines the characteristics or Universal and Variable Life Insurance.
Learn More About Insurance
These are some previous posts you can check out to learn more about the world of insurance.
- Use these four tips to save on Car Insurance
- What are the most common life insurance riders?
- Renters Insurance: Everything you need to know
- Avoid these common Boat Insurance myths.
- An essential collision insurance glossary.
- 10 Essential Home Insurance terms
Contact the Experts at Delgado’s Insurance
Looking for Disability Insurance in Bloomington, Riverside, or anywhere in California? at Delgado’s Insurance, we can help you find a policy customized to your individual unique needs.
We have locations in Riverside, California, and Bloomington, California. Contact us today by telephone (951-361-0084, 909-421-9003), email, or through our social media accounts to get a free quote and learn more about our Life Insurance options.