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Term life insurance lasts for a specified number of years and then ends. You choose the term when you take out the policy, with common terms being 10, 20, or 30 years. The best-term life insurance policies balance affordability with long-term financial strength.
Types of Term Life Insurance:Term life insurance is attractive to young people with children because parents can obtain large amounts of coverage at reasonably low costs. Upon the death of a parent, a significant benefit can replace lost income.
These policies are also well-suited for people who temporarily need specific amounts of life insurance. For example, the policyholder may calculate that by the time the policy expires, their survivors will no longer need extra financial protection or will have accumulated enough liquid assets to self-insure.
Term life insurance is for a predetermined period, typically between 10 and 30 years. Term policies may be renewed after they end, with premiums recalculated based on the holder’s age, life expectancy, and health. By contrast, whole life insurance covers the entire life of the holder. Unlike a term life policy, whole life insurance includes a savings component, where the cash value of the contract accumulates for the holder. The holder can withdraw or borrow against the savings portion of their policy, where it can serve as a source of equity.
Whole life insurance, also known as traditional life insurance, provides permanent death benefit coverage for the life of the insured. In addition to paying a death benefit, whole life insurance also contains a savings component in which cash value may accumulate. Interest accrues at a fixed rate and on a tax-deferred basis.
Whole life insurance policies are one type of permanent life insurance. Universal life, indexed universal life, and variable universal life are others. Whole life insurance is the original life insurance policy, but it does not equal permanent life insurance as there are many types of permanent life insurance.
Universal life insurance and whole life insurance are both permanent life insurance types that offer guaranteed death benefits for the life of the insured. However, a universal life policy allows the policyholder to adjust the death benefit as well as the premiums. As one might expect, higher death benefits require higher premiums. Universal life policyholders can also use their accumulated cash value to pay premiums, provided the balance is sufficient to cover the minimum due. Whole life insurance, alternatively, does not allow for changes to the death benefit or premiums, which are set upon issue.
Universal life (UL) insurance is permanent life insurance (lasting the lifetime of the insured) that has an investment savings element and low premiums similar to those of term life insurance. Most UL insurance policies contain a flexible-premium option. However, some require a single premium (single lump-sum payment) or fixed premiums (scheduled fixed payments).
Unlike term life, UL insurance policies can accumulate interest-bearing funds like a savings account. Additionally, policyholders can adjust their premiums and death benefits. Those paying extra toward their premium receive interest on that excess.
If you want to build tax-deferred savings and don’t expect to tap into the funds for a long time, universal life may be a suitable option. The cash value option that’s part of a universal life policy may be available for you to withdraw or borrow against in an emergency.
It’s a good idea to talk with your insurance provider to better understand your life insurance options. They can help you review your personal situation and long-term goals to choose a policy that’s a good fit for you and your family.
Health insurance is a contract that requires an insurer to pay some or all of a person’s healthcare costs in exchange for a premium. It helps protect individuals from high medical expenses and makes healthcare more affordable.
Health insurance provides financial protection against high medical bills. It ensures access to preventive services, regular check-ups, emergency care, and treatment for illnesses and injuries.
Private health insurance is offered by companies and can be purchased individually or through an employer. It includes a variety of plans such as HMOs, PPOs, and EPOs.
Public health insurance is provided by the government. Examples in the United States include Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP).
Many people receive health insurance through their employers. These plans are typically group policies with shared costs between the employer and employee.
These plans are purchased directly from insurance companies or through the Health Insurance Marketplace. They are ideal for self-employed individuals or those without access to employer coverage.
The Health Insurance Marketplace is a service that helps people shop for and enroll in affordable health insurance. It was established by the Affordable Care Act (ACA) and offers subsidies based on income.
A premium is the amount you pay monthly for your health insurance policy.
A deductible is the amount you must pay out-of-pocket for medical services before your insurance begins to pay.
A copayment is a fixed amount you pay for a covered health service, usually at the time of service.
Coinsurance is your share of the costs of a covered healthcare service, calculated as a percentage.
This is the most you have to pay for covered services in a plan year. After you spend this amount, your insurance pays 100% for covered services.
When choosing a plan, consider factors such as premium cost, coverage benefits, provider networks, prescription drug coverage, and total out-of-pocket expenses.
Health insurance is a critical tool for managing healthcare expenses and maintaining access to necessary medical services. Understanding how it works can help you make informed choices and stay financially protected.
Medicare is a federal health insurance program in the United States primarily for people aged 65 and older. It also covers certain younger individuals with disabilities or specific medical conditions, such as End-Stage Renal Disease (ESRD).
Part A covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care services. Most people do not pay a premium for Part A.
Part B covers certain doctors’ services, outpatient care, medical supplies, and preventive services. There is usually a monthly premium for Part B.
Part C is offered by private insurance companies approved by Medicare. It includes all benefits and services covered under Parts A and B and usually includes Part D as well. Medicare Advantage Plans may offer extra coverage such as vision, hearing, and dental.
Part D adds prescription drug coverage to Original Medicare and some Medicare Advantage Plans. It is provided through private insurers that are approved by Medicare.
Individuals are eligible for Medicare if they are 65 or older, or if they are under 65 with certain disabilities. People with End-Stage Renal Disease or Amyotrophic Lateral Sclerosis (ALS) also qualify regardless of age.
Enrollment can be done through the Social Security Administration. Initial enrollment begins three months before turning 65 and lasts for seven months. Delays in enrollment may lead to late penalties unless you qualify for a Special Enrollment Period.
While Part A is usually free, Part B and Part D require monthly premiums. There may also be deductibles, copayments, or coinsurance costs depending on the services used and the plan chosen.
Medicare is primarily for people 65 and older, while Medicaid is a state and federal program that helps with medical costs for people with limited income. Some individuals may qualify for both programs.