A type of coverage entitled universal life insurance has been around since the late 1970′s, and is designed to provide a flexible package with many options that will cover you through your entire lifetime.
Although there are many specific uses for term policies, there are some that are more popular than others. Here are 3 specific and popular ways to use term life insurance:
You may ask what makes this much better than a typical savings account in a bank. In a typical account, your money may earn no more than two or three percent depending on the bank. This rate is fixed and you cannot have it changed. What’s more, this figure is determined by the bank and may remain unchanged for many years. In a fixed index annuity, your money will earn depending on the stock market’s performance.
Because of this, it is possible to have an account that grows much faster than any other type of savings account in any bank. However, the opposite can also happen as your growth can stagnate if the market does so. When these annuities were still being introduced many decades ago, it was possible to sometimes lose some of your investment. Fortunately, banks now have a may of limiting your performance relative to the market. In the direst circumstances, you will still be able to earn, albeit at a slower rate.
Payoff Debt Another use for term life insurance is to payoff a mortgage, a home equity line of credit, auto loans, installment loans, credit cards, and other debts. This protection allows the surviving spouse to not worry about making monthly mortgage and other debt payments and also gives them the opportunity to keep their current house, auto(s), and other possessions.
Usually, these instruments are on a one year minimum participation rate. This mean that you can’t withdraw your funds until such time has passed. If you do take back your money, you may have to pay a penalty. Some banks make it even harder by forfeiting all your earnings.
Final Expenses A funeral can be expensive. Furthermore, it can be stressful worrying about how to pay for it. It’s the last thing grieving families should have to worry about. Having insurance to cover final expenses allows friends and family to focus on grieving, not paying the bills.
There are a variety of ways you and/or your family can use these policies to your advantage. Because they are so affordable, many people use term insurance as a cornerstone for their financial plan. It’s a good idea to meet with a professional in your local area to discuss how much you and your spouse may need and to determine which type of policy is best for your specific situation.
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