Fixed Loan with Life Insurance
To insure one's life against loss is no small or insignificant undertaking. With women entering the workforce in greater and greater numbers, the danger of the primary breadwinner being lost through early death is not so pressing. Nevertheless, the invention of life insurance has helped alleviate that same fear for many families. Life insurance also helps with achieving a sense of security about outstanding debts such as mortgages and loans.
There are different types of life insurance for an individual worker to consider. Note that life insurance is different from disability insurance, car insurance, etc. because with life insurance, you are literally insuring your life against the risk of your death. Life insurance benefits are meant to recuperate the losses your death would represent to your family if you die before retirement. The different kinds of life insurance have to do with the kind of policy you desire.
A term policy, also known as a fixed term policy, is the simplest and least expensive life insurance policy to hold. This policy is pure insurance with no cash held in any account. It is designed to pay the designated beneficiary a lump sum upon your death. The benefit and the policy amount are the same; e. g., a $100,000 policy will result in a $100,000 benefit.
Whole life insurance not only provides permanent protection for specified dependants in the policy, it also provides a cash account. The insurance company providing the coverage manages the accounts associated with the policy. Advantages over term life insurance include the fact that the earnings the cash account accumulates are tax-deferred.
Variable life insurance is more speculative than either term or whole life insurance. A variable policy means that the death benefit is allowed to vary in relation to the returns on the cash account. This policy also allows you to borrow against the policy during your lifetime in case you are in need of cash.