There are 2 types of life insurance, permanent life insurance and term life insurance. Much time is spent discussing term life now let us take a few minutes to talk about permanent life.
A permanent policy is one which you can keep for as long as you want to keep it even if it is for the rest of your life...even up until age 100. Permanent policies usually have a cash value that you can fall back on in the future if you need to. To put it simply you can accumulate cash in a permanent type policy.
This is money you can take in the future, in the form of a policy loan, and still maintain your policy. The death benefit will be reduced by the amount you take out if you don't put it back.
If you find you have no further need for life insurance coverage in the future you can cash in your policy.
Some permanent life policies pay a dividend in addition to the cash value if the company with which you have your policy does a good job with their investments and are good at keeping their expenses down.
Dividends can be used to reduce premiums, purchase paid up additions or they can be taken in cash. Dividends are not guaranteed.
Different Types Of Permanent Policies
There are many different types of permanent policies. You can buy a whole life policy in it's traditional form or you can buy modified versions of the whole life policy.
You can buy a universal life insurance policy which has a term insurance base and is hooked up to a savings plan or you may elect to invest into a variable universal life policy.
This plan is whole life based and is hooked up to an investment plan. A special license, other than a life insurance agents license is required for the agent to sell variable life insurance. This license is an N.A.S.D. License.
There are many opinions as to what is the best permanent life insurance plan to buy. The life insurance companies also get very creative when designing a modified whole life plan.
Some of them have a pretty low premium and at the same time have a break even point where cash values plus dividends equal total premium paid. This is the type I like and own.
Keep in mind that dividends are not guaranteed.
When we think of affordable life insurance, or affordable anything for that matter, we often, mistakenly, think of a product that would require the least cash outlay.
Many life insurance buyers find the 30 year term insurance policy quite attractive. It fulfills their needs. Who, what kind of buyer, would buy the 30 year term policy.
The 20 year term insurance policy is probably the most loved and most bought term life insurance policy. The reasons for this are pretty obvious. People tend to think 20 years when planning long term.