The insurance of life is offered in two basic types: temporary and overall life. What you choose depends on your situation familiar, age and goals of saving. Some, but not all, life insurance policies will save and invest money, and some have a cash value. It is important to understand how the rescue work in cash before signing any form of life insurance.
If you do not need a savings vehicle, but still want to buy life insurance, you should consider a term policy. This is simply a policy that pays your beneficiaries if you die. You pay for the policy in installments, either monthly, quarterly, semiannually or annually. If you stop paying premiums, the policy falls. There is no value in the policy if it falls, and do not receive any money delivering it.
A whole life policy is the combined life insurance with a savings or investment account. The premiums, which are higher than for term life insurance, paid by insurance and also represent a regular contribution to a separate account, which gradually rises in value as you continue paying premiums. Investments in the account can go to mutual funds, money market funds or other investment instruments that are under professional management.
While pay the premiums, whole life policy gradually builds a cash value increases as the investment account. If you borrow against this value, the insurance company does not restrict how you use or return the money. The loan may bear interest you must pay, or the insurance company can contribute the same amount of money to the account, while the loan is outstanding to earn interest again. The amount that you borrowed simply subtracted from the cash value until you pay.
The cash value also represents the “surrender value” of the policy. This is the amount of money you receive if you give the policy, an option that is open for all the time you’re paying premiums. If you decide to give up the policy, the insurance company follows surrender charges and any outstanding loan and interest charged on loans. You lose coverage life insurance and waivers to the investment account.