Life insurance policies have variations and are designed for different purposes. Your insurance agent can provide you with specific details to help you choose the policy that is best suited to your particular needs.

Life insurance is usually a long-term commitment. You should know the reason for buying life insurance when you set out to do so. While the financial protection of one’s dependents is usually the primary reason for purchasing life insurance, you may have other objectives in mind. For instance are you accumulating funds for a particular purpose such as college education costs? To purchase a property? Are you trying to build supplemental income for retirement or emergencies? To safeguard against death duties?

If you have definite reasons, you must explain these to the insurance agent.

There are several types of life insurance are available to meet your needs. Firstly, there are 2 main categories: permanent insurance and term insurance. Permanent life insurance is as it sounds, for your whole life. Only on your death will the insurance amount be paid to your dependents or to your estate. Term insurance is for a fixed number of years. Each has its advantages and disadvantages.

Over time, permanent life insurance builds in value. Term insurance is usually intended for meeting short-term or temporary needs. Term policies build no cash value.

Term life insurance offers protection for your loved ones for a specified period of time - typically from 1 to 20 years. If you stop paying premiums, the insurance stops. Term policies pay benefits if you die during the period covered by the policy. Term life insurance may be appropriate for short-range needs, for example, the length of a home’s mortgage. Premiums for term insurance may be higher as you get older.

Whole life insurance or permanent insurance policies do not expire at any particular date; in fact they end with the death of the insured. These policies accumulate cash value, although they should not be purchased solely for that use, since their primary purpose is to provide protection. This cash accumulation feature can be very useful if the policy holder runs into financial difficulties or suddenly needs money for some personal emergency. He can borrow against the policy.

The cash value accumulation on a whole life insurance policy is tax-deferred and you can borrow or withdraw money against the accumulated cash value. Additionally, many companies pay policyholders an annual dividend.