The National Association of Insurance Commissioners (NAIC) provides consumers with helpful information about life insurance. We recommend that you review the life insurance material available at the NAIC web site.
As you study the NAIC material, you will learn that:
Your need for life insurance varies with your age and responsibilities.
It can be a very important part of financial planning because it pays monetary benefits upon the death of the insured covered in the policy.
There are several reasons to purchase life insurance.
You may need to replace income that would be lost with the death of a wage earner. You may want to make sure your dependents do not incur significant debt when you die. Life insurance may allow them to keep assets versus selling them to pay outstanding bills or taxes.
All life insurance policies are not the same.
Some give coverage for your lifetime and others cover you for a specific number of years. Some build up cash values and others do not. There are two basic types of life insurance: term insurance and permanent insurance. Term insurance generally has lower premiums in the early years, but does not build up cash values that you can use in the future. It covers you for a term of one or more years, and pays a death benefit only if you die in that term. Permanent insurance (such as universal life, variable universal life and whole life) provides long-term financial protection. These policies include both a death benefit and, in some cases, cash savings. Because of the savings element, premiums tend to be higher than term insurance premiums.
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