Life Insurance vs Other Types of Insurance
Life insurance is very different from the other kinds of insurance available to you. The differences are important to consider as you think over your insurance needs.
The major difference between life insurance and car insurance, for example, is that you may never get in a car accident and never have the need for the coverage. You may never have the need for homeowner’s insurance if nothing ever happens to your home or property. Only life insurance covers losses against an event that is guaranteed to occur at some point in time – the policyholder's death.
The truth is that unless someone discovers the fountain of youth, it is 100% certain that one day, you will eventually die.
This distinction is important to understand, notes David Lerner and Associates Vice President of Insurance Services, Dan Gardella. “When viewed through this lens, life insurance isn’t an expense — it’s an asset that will eventually provide a return on your investment. As long as you pay the premiums and maintain the policy, your beneficiaries will eventually receive the death benefit.”
There are two main types of life insurance: term and permanent. “With term insurance the payment of the death benefit is guaranteed by the insurance company as long as the policy remains in force,” Gardella explains.
A permanent insurance policy, also sometimes referred to as whole life insurance, is designed to build internal cash value that can be accessed before the insured dies via policy loans.
“Policyholders can tap into the cash value that builds up inside a permanent insurance policy to meet a wide range of financial needs, including providing income for retirement or paying for children’s college educations,” says Gardella.
Every individual’s and family’s insurance situation is unique, so you should consult with an insurance professional for guidance on the best type of life insurance for you and your family.
IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Certain types of insurance policies are offered by prospectus only. Investors should request a prospectus from the issuer or sponsor before investing. Read the prospectus carefully and consider the investment objectives, risks, charges, expenses and other information before purchasing.