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Life Insurance 101

Many people think of life insurance as a policy that will protect your family or other dependents. It's not YOUR life that is being insured but the life and lifestyle of those that will be left behind. Although this is the basic component to life insurance, the use of different life insurance policies can become an essential part of any long term investment plan.

Term life insurance is a policy that is typically purchased for a limited amount of time to cover the costs of a specific expense. It is strictly insurance that will cover a particular lump sum and the policy never accumulates a cash value.

Whole life insurance is purchased to cover the whole life of the policy holder and is enforced as long as the premiums on the policy are paid. The policy provides potential protection for dependants but at the same time it builds up cash value that can be used as a supplement for retirement.

Universal life is the most flexible of policies. It offers the policy holder the opportunity to earn market rates of interest on the accumulated cash value and the right to borrow or withdraw from that cash value during the lifetime of the policy.

Although life insurance is still mostly for the ones that are left behind, there are ways to utilize policies for the here and now. Choosing different policies for different purposes is the best way to maintain a health balance for your financial future. Take some time to talk with an insurance specialist to see which different policies will work for you.

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Bill also writes for Low.com. This website offers low cost health, life, homeowners and auto insurance. Click the underlined link to learn more about consumer rights, credit cards and tips on saving money.

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