It’s an unfortunate fact of life that death is never too far away. It can happen at any moment, to anyone, and it doesn’t care if you have a family or not. Sudden death can leave a family without its primary breadwinner, and the secondary losses can be devastating. This is why it’s important to have a life insurance policy.
A life insurance policy is a contract between an insurance company and the owner of that policy. It states that in exchange for receiving a certain amount of money known as the premium, the insurance company will pay out a death benefit to your family upon your death.
However, it’s not always that simple. There are many different kinds of life insurance policies, and learning the basics can help you make a more informed decision when choosing a policy that is right for your family.
There are two main kinds of life insurance policies, term and whole life.
Term Life Insurance
A term life insurance policy covers you for a period known as the "term." This means that if you die within the term of your policy, your family will receive the death benefit. But if you live past the term, your family won’t receive any benefits.
Term life insurance is the cheapest life insurance, but it does not build any cash value. Therefore, term life insurance premiums are usually considerably more inexpensive than whole life policies.
Whole Life Insurance
As the name implies, a whole life insurance policy covers you for your entire lifetime. The premiums are higher than a term life insurance policy, but a significant difference is that these policies accumulate a cash value over time. You can borrow against this cash value or withdraw a part of it. However, you should be careful because the death benefit will become smaller and smaller if you withdraw too much cash from a whole life policy. It will make it more difficult for your beneficiaries to collect on your life insurance when the time comes.
Life Insurance in Colorado Springs, CO
Life insurance is an important financial tool that can be used to protect your family in the event of your death. However, every person’s situation is different, so there is no one-size-fits-all solution. Contact Westco Insurance LLC for more information about life insurance and how it can work with your unique situation.