Life insurance policy is a legal binding contract between the insured and the insurance company. In exchange for regular premium payments, the insurance company agrees to pay a lump-sum death benefit (tax-free) to your beneficiaries if the insured pass away from a covered accident or illness while the policy is active.
Key Terms:
- Policyholder: the person who owns the life insurance policy.
- Premium: The payments you make to keep the policy active.
- Beneficiary: The person(s) who will receive the death benefits (tax-free).
- Death Benefit: the amount paid to the beneficiary upon the insured’s death.
Types of Life Insurance:
- Term Life Insurance: Provides coverage for a specific period (10, 20, or 30 years) and excludes a cash value accumulation component. It is often more affordable and ideal for temporary needs like mortgage protection.
- Whole Life Insurance: Offers a lifetime coverage and includes a cash value accumulation component over time.
- Universal Life Insurance: Combines flexible premiums with cash value accumulation and lifelong protection.
Life Insurance Purposes:
- To cover final expenses
- To replace lost income
- To pay off debt like a mortgage or student loans
- To provide living benefit (tax-free via policy loans)
- To provide death benefit (tax-free) for your beneficiaries
Conclusions:
Life insurance is for everyone (not just the wealthy) who wants assets protection and accumulation. Whether you are single parent, married, or a homeowner, there is a policy that fits your situation and financial goals.
Ready to learn more or see if a particular life insurance fits your situation or financial goals? Contact us to explore your options and get a personalized illustration.