Many of us buy life insurance because We all have a responsibility to protect those who depend on us with a sufficient amount of life insurance protection, we want to make sure our loved ones remain financially secure after we die, Life insurance provides cash to your family after your death. This cash (known as the death benefit) replaces your income and can help your family meet many important financial needs like daily living expenses, mortgage payments and college savings It can provide those who are left behind with a lifetime of financial security. Besides taking care of your family, life insurance can also protect your business.
What would happen to your business if you, one of your fellow owners, or perhaps a key employee, died tomorrow? It can also provide businesses with the capital necessary to survive the passing of a key employee or partner.
Everyone needs life insurance. If we look into depth, what lies after we die, the future of our children, parents, debts, loans. Everyone has some kind of deficits to take care of and life insurance is a good solution.
Why we buy life insurance will vary, depending on age, financial situation and other factors. e.g- A Single person may get his life insurance to meet his medical bills, debts (credit cards or loans), elderly parents who may be dependent upon for his support.
Families with young children have a clear need for life insurance. If both spouses work, the loss of one income will cause the family immediate economic hardship and make it harder for them to realize future goals, such as paying for the children’s’ education. If you died suddenly, could your family maintain their standard of living on your spouse’s income alone? you need to make doubly sure that you have enough life insurance to safeguard your children’s financial future.
Before you buy a life insurance, there are some basic things to consider How much do I need? you should consider your financial situation, and the standard of living you want to maintain for your dependents or survivors. How much money will my family need after my death to meet immediate expenses, like funeral expenses and debts? How much money will my family need to maintain their standard of living over the long run?
Types of Life Insurance
There are many choices when it comes to life insurance. Policies are now available from more than 2,000 life insurance companies, banks and other financial institutions. We have tried our best to give you the best information and help you decide which insurance is best suited to you. Our experts have studied various insurance companies, their policies, in order to give you the best. Trust us and we will do the rest for you.
There Are two main forms of life insurance available are:
A) Term Life Insurance or Term Insurance.
Any life insurance policy that covers you for a specific, predetermined amount of time is a term life policy. Should you die during your policy’s term, your beneficiaries will receive
the payment – should the policy expire before you do, there is no payout. Term insurance is generally the least expensive and least complicated type of life insurance. It provides insurance protection at a low cost for a specified period of time, such as 1, 10 or 20 years.
With term insurance, you’re generally just paying for the death benefit, the lump sum payment your beneficiaries will receive. If you die within the term period, a death benefit is paid to your beneficiary. If you are still living at the end of the term, protection ceases unless the policy is renewed. Term policies are only insurance, they have no cash value or added savings feature.
Who’s It For: People with a temporary need for life insurance protection.
Term insurance is often a good choice for people in their family-formation years,
especially if they’re on a tight budget because it allows them to buy high levels of coverage when the need for protection is often greatest. Those who need a large amount of insurance protection but have limited budgets.
Benefits: They are as follows:
- It provides insurance protection for a low cost.
- Most Term policies allow you to convert your term policy to permanent life.
- insurance policy without having to take a medical exam or provide other information about your health.
- Death benefits are generally received free from income tax.
Drawbacks To Consider: They are as follows:
- Premiums generally increase with age and they could become unaffordable later in life.
- Once the term period expires, the insurance coverage ceases and the policy has no protection for your life.
- If you buy a term policy only to realize at the end of the term that you still have a need for life insurance? Well, it’s sort of good news, bad news story.
- Many policies will give you the option to renew your policy when you reach the end of the term but you’ll probably face much higher costs since age is one of key factors used to determine life insurance premiums.
Important Questions To Ask: Here are some important questions to ask yourself when considering the purchase of a term policy:
- How long can I keep this policy?
- Do I have the option to renew the policy or to convert it into permanent life insurance?
- Will I need a medical exam if I want to convert?
- When will my premiums increase?
2) Permanent Life Insurance or Permanent Insurance.
Permanent life insurance provides lifelong protection. Permanent insurance is initially more expensive than term insurance. Permanent insurance is often referred to as cash value insurance because they can build cash value over time (money that you can borrow against and, in some instances, withdraw to help meet future goals, such as paying for a child’s college education, as well as provide a death benefit to your beneficiaries.)
The premium and death benefit you are quoted at your policy’s start remain the same throughout the policy’s life. But because your insurer will be investing your premiums, the policy may also accumulate a cash reserve. These funds can be put to use as premiums, reinvested, or saved – it’s your choice.
Permanent life insurance is distinguished from term insurance in several ways. While term insurance provides protection only for a specific initial period of time, permanent insurance can provide protection for your entire lifetime.
Permanent life insurance policies enjoy favourable tax treatment, meaning that you pay no taxes on any earnings in the policy so long as the policy remains in force.
Who’s It For: People who:
- May need life insurance for the long term.
- May be interested in accumulating policy cash value to provide funds for education, retirement or other future goals.
- Want to take advantage of the tax-favoured treatment of cash value.
Benefits: They are:
- The benefit of whole life insurance is – consistency.
- You pay the same premium from day one till you’re 120.
- The cash value portion will always be intact and earning some amount of interest.
- And the death benefit will never decrease (provided that you don’t borrow against it).
- Over time, permanent insurance may be more economical than term insurance and the policy can build a cash value.
- Earnings from the policy may qualify for tax-favoured treatment.
- If you cancel the policy, the accumulated cash value is yours to use as you wish.
It’s impossible to say which type of life insurance is better because the kind of coverage that’s right for you depends on your unique circumstances and financial goals.