Life insurance plays a vital role in protecting your loved ones after your death. Thinking about the same is difficult for almost every individual. If you are looking for life insurance in the USA, you should know its function and types before purchasing one for your family. Overview and Function of a Life Insurance Policy Life insurance refers to a contract signed between a policyholder and an insurance company or individual agency. The policyholder agrees to pay a yearly or monthly premium. The insurance company pays a certain amount of money to the policyholder after death. Types of Life Insurance Policies available in the USA Insurance companies operating in the USA offer two types of life insurance policies to individuals and employees. These include the following- Term Life Insurance Term life insurance in USA lets you purchase a policy for a specific period. Here, the term ranges from 10 years to 30 years. During that period, you may change your term. For instance, if you purchase an insurance plan for 10 years, you may extend it up to 20 years or 30 years after three or four years. However, term life insurance does not give you any cash value. It will expire after your term ends unless you convert it. The positive aspect of a term life insurance plan is that it works well for all who have limited budgets. Permanent Life Insurance A permanent life insurance policy is available for the entire life. Moreover, if you select the best life insurance quote offered by reputed companies, you may get permanent plans fora maximum of 65 years. Permanent plans are further available in two types, which include the following- Universal Insurance Universal permanent life insurance gives you a pool of investment options. Here, the paid premiums may change with time according to your decision to manage your policy. Your premium amount will depend on diverse factors and options, including cash values and investments. Whole Life Insurance Whole life insurance provides a set of premiums. The plan remains valid until you continue to pay the premiums. In this way, the life insurance policy creates a cash value with time. Furthermore, if you surrender your insurance policy, it will return cash value to you.
Additional Customized Life Insurance Policies Other than term and permanent types of life insurance policies, good companies offer customized life insurance plans. These are as follows- Combination Insurance Plans Combination life insurance plans are somewhat different from term and permanent insurance plans. They give options to get a payout in critical circumstances other than your death. Many people in the USA select a policy/plan, which combines other coverage,including the insurance related to long-term care. Convertible Insurance Plans Convertible life insurance policies let you commence a term policy and convert it to a permanent or whole life one. Hence, you do not have to lose your policy at the end of its term. Instead, you may change or convert it to a new one. Another benefit of a convertible plan is that it avoids undergoing a medical examination in your old age while converting your term to a whole life insurance policy. Conclusion Overall, life insurance offered by a reliable USA insurance agency prepares you and your family members for the future. Therefore, learn a few basics of the insurance policy and its coverage to avail the required protection in life.
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