Many of us have heard of or read the book, The Five Love Languages. We know those languages: words of affirmation, quality time, gifts, acts of service, and physical touch. While those languages are necessary, most of them will only leave a fond memory. They won’t provide for our loved ones when we’re gone. In order to care for our loved ones, we have to learn a new love language, the language of life insurance.
Life insurance falls into two categories: term and permanent. Within those two categories are subcategories. Term includes term life insurance and return of premium (ROP) term life insurance. Permanent life insurance includes whole life, mature market life, and universal life; however, whole life is the most common form of permanent life insurance. Several differences exist between term, return of premium, and whole life and are listed below:
- Term life insurance pays a death benefit during a set period of time, usually ten, fifteen, ten, or twenty years. The benefit expires at the end of the term unless the policy is renewed. Term life insurance can be converted into a permanent policy.
- Return of premium (ROP) comes with terms of fifteen, twenty, and thirty years. ROP offers a death benefit, if needed. If the death benefit isn’t used during the life of the policy, policyholders receive cash back, typically one hundred percent of premiums paid, at the end of the term.
- Whole life remains in effect as long as the premiums are paid. Part of each premium paid is set aside in a cash-value, tax-deferred account over the life of the policy. Many whole life plans also are participating, which means that policyholders receive dividends that can be put toward purchasing additional insurance or reducing future premiums.
Deciding on a life insurance policy can be challenging. You have to consider your current lifestyle as well as the future. If you need any assistance in choosing a life insurance policy, visit with an associate at Flor & Associates Insurance Agency.