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The Daily Ardmoreite
  • Understand Life Insurance Choices

  • When you think about life insurance, you may dismiss it as something that only older people need. A life insurance policy is taken out on someone’s life that pays out when they die, helping to financially protect dependents and loved ones. Insurance proceeds are used to pay ongoing expenses, educate young children, pay off mortgages or cover final expenses.
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  • When you think about life insurance, you may dismiss it as something that only older people need. A life insurance policy is taken out on someone’s life that pays out when they die, helping to financially protect dependents and loved ones. Insurance proceeds are used to pay ongoing expenses, educate young children, pay off mortgages or cover final expenses.
    People put off buying life insurance because they don’t want to think about their own mortality, but it’s important to your family’s financial security, say personal financial planning experts at the Oklahoma Society of Certified Public Accountants. Understanding your options is the first step.
    Decipher the jargon.
    “Life insurance” is a broad term covering many types of policies in two main categories: term policies and permanent policies. Within permanent life policies, they are divided into three categories: whole life, universal and variable life insurances.
    Term policies are pure temporary insurance coverage purchased for a fixed time period such as one year, five years, 10 years or more. If the insured person dies during the insurance period, the amount of the policy is paid to the named beneficiary. At the end of the term, assuming the policy has not been renewed, the policy no longer has any value.
    Permanent life policies provide insurance coverage and build cash value that you can borrow against and is typically more expensive than term insurance.
     
    Whole life insurance has a set premium payment and builds cash value at a guaranteed rate of return.
    Universal life insurance is a flexible premium adjustable life insurance product that allows you to vary the premium payment within certain limits.
    The death benefit can be increased or decreased as defined in the policy without having to buy a new contract. Like whole life, the cash value can be borrowed.
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    Variable life insurance is a form of permanent insurance that builds cash value. What makes variable life insurance different is that the cash value is dependent on the investment performance of one or more separate accounts.
    In other words, the policy owner is subject to financial risk, which may result in the loss of its cash value.

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