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What Type of Life Insurance Do You Need?

You have made the decision to purchase life insurance, but perhaps you are still confused about the types of life insurance available. Providing financial relief for your family in the event of you or your spouse’s death is the right thing to do. The type of insurance policy you decide upon is a very important consideration. Educating yourself is important if you are searching for Life Insurance in Houston. There are two main types of life insurance: term and permanent. Your family will go on after you pass away, so decide very carefully how you plan to care for their future.

Term life insurance gets it name from the basic premise that the life insurance policy will cover you for a certain period of time, or a term. The payment amount is fixed, meaning the premium amounts are the same every month. Term life insurance is usually the least expensive option of the two types. If the insured person passes away before the term ends, the death benefits, or the amount of the life insurance policy, is paid to the beneficiary. A beneficiary is the named person or persons legally entitled to receive the death benefit. If the term expires before the insured person dies, you must obtain coverage to extend the term. Often, you must pay a higher premium or select a lower amount of insurance when the term has expired.

Permanent life insurance has no term; therefore, it does not expire. The major component of permanent life insurance plans is the ability to borrow against the policy’s cash value. The benefit of this type of plan is its usefulness for unexpected or large expenses, such as college tuition or an emergency. Permanent life insurance policies usually require a waiting period before you can withdraw any cash. In other words, you would need to wait until there is a sufficient amount of cash built up into the policy. In addition, there are very favorable tax benefits in choosing a permanent plan. Cash withdrawn from your policy is generally tax deferred. This means that money taken out cannot be taxed if you abide by the guidelines. If you are interested and need more information about Life Insurance in Houston, contact an agent today.

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