Life insurance is a policy or contract between you and a life insurance company that can last for the rest of your life or for a specific time period. This contract guarantees that your beneficiaries will get a tax-free cash payment (also called the death benefit) when you die.
Term life insurance is designed to last a certain number of years, then end. You choose the term when you take out the policy. Common terms are 10, 20,30 or 40 years. The best term life insurance policies balance affordability with long-term financial strength.
Many term life insurance policies allow you to renew the contract on an annual basis once the term is up. This is one way to extend your life insurance coverage but since the renewal rate is based on your current age, premiums can rise precipitously each year.
Decreasing term life insurance is renewable term life insurance with coverage decreasing over the life of the policy at a predetermined rate.
Joint first-to-die term insurance pays a death benefit when the first partner dies. Both are insured under the same policy and receive the same coverage.
This type of coverage insures more than one life under one contract. The amount of life insurance can be the same or different for each life insured. This type of life insurance pays a death benefit for each life insured.
Term life insurance is an effective option if you are looking for an affordable life insurance option. It can provide temporary protection for the time in your life that you have the most financial obligations. For example, a mortgage or business loan, or to provide coverage until your children are finished school.
Permanent life insurance stays in force for the insured’s entire life unless the policyholder stops paying the premiums or surrenders the policy. It’s more expensive than term.
Universal life insurance is a type of permanent life insurance with a cash value component that earns interest. Universal life features flexible premiums. Unlike term and whole life, the premiums can be adjusted over time and designed with a level death benefit or an increasing death benefit.
Whole life insurance is a type of permanent life insurance. It accumulates a cash value in order to last the lifetime of the insured person. Cash value life insurance also allows the policyholder to use the cash value for many purposes, such as a source of loans or cash or to pay policy premiums.
Whole life insurance is a great option if you would like lifetime coverage with premiums that don’t change over time. It is also a good choice if you are looking for insurance that will help protect your family from financial burden after you die. The tax-free payment once you die can also be used to cover the cost of your funeral. Overall, this helps you make plans for your estate following your death.
Universal life insurance is an excellent way to increase your savings in addition to your RRSPs and TFSA. This is a great choice if you want to leave more money for your beneficiaries. In addition, this is a tax-efficient way to protect the value of your business if you are a business owner.
Term life insurance from permanent life insurance in several ways but tends to best meet the needs of most people looking for affordable life insurance coverage. Term life insurance only lasts for a set period of time and pays a death benefit should the policyholder die before the term has expired. Permanent life insurance stays in effect as long as the policyholder pays the premium. Another critical difference involves premiums—term life is generally much less expensive than permanent life because it does not involve building a cash value.
Before you apply for life insurance, you should analyze your financial situation and determine how much money would be required to maintain your beneficiaries’ standard of living or meet the need for which you’re purchasing a policy with the help of Alexandra Katsen. Also, consider how long you’ll need coverage for. All of that you can discuss with us by clicking on contact page here.