ow we’re going to talk about, what a life insurance policy actually means? For those of you out there who are searching for a life insurance policy, there are two different types of policies. There is a term insurance policy, and there is a permanent insurance policy for life and here’s what the difference between the two are.
Think of it as owning or renting your own home. If you rent your home all that money goes to the landlord you don’t have any equity or value in that. When you’re done with the term of your lease you’re going to go someplace else you don’t get anything back from it, that is term insurance. All the money that you give in premium goes directly to the life insurance company to ensure your life. In the end, your beneficiary is going to get the life insurance benefits or if you’re the beneficiary of somebody else you’re going to get the life insurance benefits, but that’s it.
15. what is life insurance policy
On a permanent policy, it’s like owning a home. You’re paying that portion just like you were in the term, but you’re paying more for value. So the advantage of doing either a whole life policy, which is a permanent policy or a universal life policy is that you are at you’re paying more up front just like a mortgage is usually more than rent. But that extra money is a vehicle for you, whether you want to use it for retirement, or wealth management, or whatever you want to use it for. At some point in time in your retirement years, you’re going to pull that money out and use it while you’re alive, or you may want to take a loan against it.
So there are two different types of policies when it comes to life insurance. There’s pure term insurance it’s just ensuring your life. Less expensive but you get nothing at the end. Once the money is gone, and your premium the money is gone. Permanent life insurance you can actually fund all the money that you spent into your entire life insurance because at the end you’re going to get that money back. At the end of either your life or at the end of your retirement years when you want to use it. So that is life insurance policies both term and permanent.