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LIFE INSURANCE CAN
- provide income for the surviving spouse
- pre-fund your children’s education
- pay off a mortgage
- pay off debts
- provide additional cash for retirement
income
- cover final expenses
- fund a buy-sell agreement
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There are two types of life insurance: term
insurance and permanent insurance.
Term insurance is designed to meet temporary needs. It provides
protection for a specified amount of money for a specified period of time.
Term insurance pays a benefit only if you die during the term the policy is
in effect. A term life insurance policy for $100,000 for a period of twenty
years will pay out the $100,000 benefit only if you die within the twenty
years term. If death does not occur within the twenty year period, the
policy terminates.
Permanent insurance is designed to provide protection for a lifetime.
Permanent insurance policies accumulate cash values. There are two common
types of permanent insurance: Whole Life and Universal Life.
A traditional Whole Life policy has set premiums and guaranteed cash
values. As long as you pay the premium the policy remains in force. In a
Universal Life policy the buyer assumes some of the investment risk, but
also can share in greater cash values if interest rates are higher than
expected. Premiums are not set, but sufficient premiums are needed to keep
the policy in force.
In both types of policies, provided you do not take out loans against the
cash value, the full face amount will be paid. If a loan against cash values
is taken, the loan amount plus interest is credited against the death
benefits. If the policy is “cashed in”, the cash value minus surrender
charges, if applicable, are paid to you.
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This is a brief summary. The best way to find out which type of life
insurance will best suit your particular situation is to meet with qualified
insurance professional.
Still Confused? Need Help?
Call me at 800-333-1270 or 717-225-9596 for a no hassle, no pressure phone
conversation.
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