What is the Right Kind of Life Insurance for Texans?
All 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. Some policies combine different kinds of
insurance, and others let you change from one kind of
insurance to another. Some policies may offer other
benefits while you are still living. There are two basic
types of life insurance: term insurance and permanent
insurance.
Term 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. You may combine cash value life
insurance with term insurance for the period of your
greatest need for life insurance to replace income.
Term insurance covers you for a term of
one or more years. It pays a death benefit only if you
die in that term. Term insurance generally offers the
largest insurance protection for your premium dollar. It
generally does not build up cash value.
You can renew most term insurance
policies for one or more terms, even if your health has
changed. Each time you renew the policy for a new term,
premiums may be higher. Ask what the premiums will be if
you continue to renew the policy. Also ask if you will
lose the right to renew the policy at some age. For a
higher premium, some companies will give you the right
to keep the policy in force for a guaranteed period at
the same price each year. At the end of that time you
may need to pass a physical examination to continue
coverage, and premiums may increase. You may be able to
trade many term insurance policies for a cash value
policy during a conversion period even if you are not in
good health. Premiums for the new policy will be higher
than you have been paying for the term insurance.
Permanent Insurance
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.
**Article Courtesy of NAIC
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