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Life Insurance Questions
- What is term life insurance?
- Term insurance provides protection for a specified period of time. A term of 1, 5, 10, or 20 years or up to the age 65 is available. This type of policy only pays a benefit is you die during the policy term. Term insurance does not build cash value. If you stop paying your premium, the insurance expires. This insurance is generally less expensive than other types of life insurance.
What is whole life insurance? - Whole life insurance is meant to be kept in force throughout your entire life. An important feature of whole life insurance is the accumulation of cash value. The cash value is the cash available to borrow against the policy, or the value of the policy paid to the policy owner when the contract is surrendered before maturity. any withdrawal of cash value is treated as a policy loan and interest accumulates based on the loan amount. If you do not pay back the loan, the death benefit is reduced by the outstanding loan amount.
What is annuity
- An annuity pays a monthly (or quarterly, semi-annual, or annual) income benefit for the life of a person or for a specified period of time. While the basic purpose of life insurance is to provide an income for a beneficiary at the death of the insured, the annuity is intended to provide an income for the life of the annuitant.
There are two basic types of annuities, fixed annuities, which pay a fixed income backed by fixed dollar investment such as secure bonds and mortgages, and variable annuities, which vary in payment according to the value of stock and bond investments.
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