Fete Lifestyle Magazine September 2022 - Fall Fashion Issue | Page 31

What is Life Insurance?

In simple terms, a life insurance policy is a contract between a policyholder and an insurance carrier. Most life insurance policies have four parts:

Premium payments – What the insured gives to the insurance carrier

Death benefit – A sum of money the insurance carrier pays to beneficiaries upon the insured’s death

Cash value – An interest-bearing savings or investment value that’s included in permanent life insurance policies

Term period – How long the policy provides coverage for

What Kind of Life Insurance is Available?

Whole Life Insurance

You generally make level (equal) premium payments for life. The death benefit and cash value are predetermined and guaranteed (subject to claims paying ability of the issuing company). Whole life insurance can provide coverage for a set period as well as your lifetime. Your only action after purchase of the policy is to pay the fixed premium. The cash value may be accessible via policy loans or withdrawals. However, this can affect the cash value, death benefit, and even policy guarantees the insurance company gives.