Choosing the correct type of life insurance is often difficult, but it’s one of the most important decisions a person can make. There are two types: term life and whole life insurance, and each has its benefits and disadvantages. In this article are some general guidelines that can help customers of Insurance Companies in Katy TX narrow their choices.
Term Life Coverage
A person should consider term life insurance if they only need coverage for a certain period. This type of coverage allows the buyer to match the policy length to the expected duration of the need. For instance, if a parent wants to ensure that there will be money to send a child to college, they could buy a 20-year policy.
Term life insurance is also good for those who need significant coverage but don’t have much money to spend. This kind of insurance only pays out if the policyholder dies during the policy term, so the rate per unit is lower than that of permanent life coverage. If the policy owner is alive at the end of the term, coverage stops unless the policy is repurchased or renewed. Those who expect changes in their circumstances should consider convertible term life insurance, which can be converted to a permanent policy with a higher premium.
Permanent Life Coverage
Customers should consider permanent Life Insurance if they need it for the rest of their lives. Permanent policies pay death benefits whether the owner passes away tomorrow, or a century from now. Permanent life insurance is a good way to accrue tax-deferred savings, and it can be borrowed against for many purposes. Savings can be used to keep the policy in effect, and the death benefit is the collateral. If the owner dies before the loan is repaid, Insurance Companies in Katy TX collect what they’re owed before beneficiaries receive a payment.
It should be considered that permanent life insurance premiums are usually higher than those of term life insurance policies. However, premiums in permanent policies stay the same regardless of age, while term life costs can go up significantly with each renewal. There are a variety of permanent policies, such as whole life, variable life and universal life. For additional information, consult Insurance Companies in Katy TX. learn more here.
