Life Insurance

When a family member passes away, the last thing that the grieving family needs is the stress of dealing with financial crisis. Life insurance guarantees that the insurance company pays a sum of money to one or more named beneficiaries when the insured person dies. This money can be used by the beneficiaries for any purpose they deem important like paying rent or mortgage costs, funeral and burial expenses, personal debt such as student loans or credit cards, and supplement lost income.  

Types of Life Insurance

Term Insurance

• Provides coverage for a specific period, such as 10, 20, 30 or 40 years, at the end of which it can be renewed If age criteria is met.
• Premiums are quite low but will increase at policy renewal.
• Does not have any savings/investment component, just focuses on providing protection in the form of death benefit.
• Conversion to a permanent plan without any health questions is generally permitted up to a specific age
• Mostly used To cover important financial obligations which are not expected to last forever like mortgage or other debts, living expenses for the survivors, education and other needs of kids or simply as a starter plan for upgrading to a savings based permanent plan later.

 

Permanent insurance

• Provides life long coverage 
• Premiums are higher than term insurance but typically remain the same  throughout the insured's life.
• Offers guaranteed money back in the sense that everybody dies at some point and the payout to beneficiary at that time is typically much more than the premiums paid to the insurer.
• Can be in the form of Whole Life insurance which may earn dividends or Universal Life insurance which provides room for tax sheltered growth of surplus contributions
• Mostly builds up cash value that you can borrow against or withdraw while still alive.