Life Insurance

Life insurance protects those that depend on your paycheck by providing them with a large lump sum should you die. There are two major types of life insurance. Term life insurance is similar to many other types of insurance in that as long as you pay the premium you are covered for the policy term and you can renew it as needed. Cash value life insurance combines insurance payments with contributions to a long term tax-sheltered savings plan. It may be difficult; however, to use your cash value savings for anything other than insurance payments without great penalty. Examples of this type of life insurance are universal life, whole life and variable life.

There are two different types of term life insurance. Annually renewable has to be renewed every year and the premium will increase every year as you age. A level premium policy is a policy with a fixed price during the extended policy term instead of increasing with age. Level premium policies tend to have higher premiums where as annually renewable policies have lower premiums that increase more often. Different companies have different rules about when a physical exam is required for renewal of the policy.

Most experts recommend term life insurance because it is simple, flexible and more easily compared by price.