While the primary reason people purchase life insurance policies is to provide financial security for loved ones, life insurance coverage also can constitute a valuable financial tool which can be an important part of an estate plan.  One of the fundamental questions that must be addressed prior to obtaining a policy involves what is the the best type of life insurance coverage for your particular goals.  

Term and whole life coverage are the two basic types of life insurance policies.

The basic structure of term coverage involves a policyholder paying premiums on a monthly, quarterly, or annual basis for a pre-agreed period, such as 5, 10 or 20 years.  If the insured passes away during the policy term, the beneficiaries receive a specific amount of money as indicated by the policy.  If the named insured does not die during the policy term, the insurance policy does not pay out a benefit.  At the expiration of the term policy, the insured can purchase a new policy.

While whole life policies (also known as ‘cash value” or “universal life”) also involve making premium payments, the payments are made over the entire life of the policyholder rather than a designated term.  

A whole life policy builds a “cash value” which can be utilized in a number of ways:

  • Cashing Out: The insured can cancel the policy and receive a lump sum payout from the policy.  This amount paid is referred to the “surrender cash value” of the policy. 
  • Borrowing against the Policy: A loan based on your whole life policy provides several advantages over a traditional loan.  The insured does not have to qualify for the loan or even undergo a credit check.  The insured also is not required to comply with a particular repayment schedule.  The maximum amount that can be borrowed is the “cash value” of the policy.
  • Using Cash Value to Make Premium Payments: If an insured becomes strapped for funds to make premium payments, the cash value of the policy can be used to make premium payments.  This method of making premium payments can be employed until the cash value of the policy has been exhausted.

If you have been denied death benefits as the beneficiary of a life insurance policy, we may be able to help you secure the denied benefits.   

You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].

J.P. Gonzalez-Sirgo
J.P. Gonzalez-Sirgo, P.A.
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