Life insurance is one of the ways we can ensure that our families will be safe and secure when we are no longer around to be with them. We can rest in peace knowing that they are financially secure as well as knowing that they are not being placed in a bind trying to afford the many expenses that are associated with someone passing away. There are many reasons why people invest in insurance policies for their families, some of them include financial security, business reasons, tax reasons and also as a way to save money. There are two types of insurance policies: permanent life insurance and term life insurance. Most people are familiar with term life insurance however when it comes to permanent insurance do you know when to purchase permanent life insurance.
Permanent life insurance should be purchased when you know you have a permanent problem. Many people try to solve problems that are permanent with temporary life insurance. The problem with this is that term life insurance only provide coverage for a set period of time and can be looked at as temporary insurance. Whole life insurance policies or permanent policies pay out when you pass away no matter what the circumstances of your death may be. The company will pay your beneficiaries the amount that you have designated in the policy. It may be in the form of one lump sum or annual or monthly payments. There are two types of permanent insurance policies that you can participate in and you should know the difference between the two.
The two types of permanent policies are participating and non-participating. Participating policies have guaranteed set premiums, death benefits as well as cash value but also pay a dividend based on the profits earned by the insurance company that issued the policy. Non-participating policies also have a schedule of guaranteed premiums, death benefits and guaranteed values. However they do not have the extra dividend that you get based on the company’s profits as participating policies do.
Determining which type of permanent life insurance policy to participate in is completely up to the individual. You will have to base this decision on your particular needs, risk factors and the reputation of the company that you have your policy with. Remember you should choose a permanent policy to cover any conditions which may be permanent and permanent insurance policies payout cash directly to. You will have to determine which type of policy best fulfills your particular needs and financial capabilities.