Last month, I wrote about how I let my term life insurance lapse. I know I need to get a new policy. Letting the old policy lapse was not something I was happy about … but it seemed to have gotten far too expensive.
Fear not … I’m working on it. I’m continuing to research the alternatives. And there’s no shortage of life insurance offers out on the Internet. But how do you know what life insurance company to trust? I look at the offers and try to make sense of it all …
There are a number of different kinds of life insurance. Term and whole are two popular types:
Term Life Insurance works by providing a specific benefit upon the death of the policyholder. The policy will only pay out if the policyholder dies within the stated timeframe. Term life insurance does not pay out anything other than the specific stated benefit.
Whole Life Insurance, unlike Term Life Insurance, works by providing protection for the policyholder’s entire life. Some of the money you put into a whole life policy goes into a sort of savings account. This money builds up over time. So with whole life insurance, the pay out includes a fixed death benefit, as well as the equity you’ve built up.
I try not to dwell on the morbid nature of it all.