Life Insurance: What You Need to Know


Find out which life insurance policy is best for your family and how much coverage you’ll need.

Before buying life insurance, parents should know and consider a number of things. There are basically two types of life insurance policies available: term insurance and cash-value insurance.




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Term Insurance
You pay a premium over a set period (e.g., 10, 20 or 30 years). With some policies (“increasing term”), the premium goes up over the term of the policy; with others (“level term”), the premium remains the same. In return, if you die before the term of the policy is up, the insurer will pay your beneficiaries a set sum of money (the “face value” of the policy). When the term of the policy ends, your payments and coverage end.

Cash-Value Insurance
Combines insurance coverage with a savings or investment element. You pay regular premiums on the policy and, if you die while the policy is in effect, the insurer will pay your beneficiaries a set sum of money. Unlike term insurance, however, cash-value policies remain in effect for most or all of your life and, in some cases, you can stop paying premiums on the policy after a period of years.

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