In the event of your death…
Including funeral expenses, bills, and debts, what financial expenses would your family be responsible for?
How long would your family need financial support?
How does your salary contribute to your family’s expenses and future needs?
What would you like to leave behind for your children’s education, an inheritance, or donations to charity?
Do you have other assets, including other insurance policies?
Types of Life Insurance Policy
When it comes to life insurance, there are two basic types: Term Life and Permanent Life.
Term Life Insurance
Term life insurance only provides protection for a specific number of years. Your beneficiary receives the benefit if you die while the policy is in effect. If you live to see the policy reach its end date, the policy either terminates or renews for a new period (depending on the specifics of your policy).
A term policy might be written for a period of 1 to 30 years. It might renew until age 95. Guaranteed Level Term Insurance is a popular type of term coverage and provides for level premiums and coverage during the policy period.
Permanent Life Insurance
Permanent insurance, also known as Cash Value Life, provides a lifetime of protection. As long as you pay the premium, your protection remains in force, regardless of your health.
A key difference of permanent life insurance is that as premiums are paid, a part of each payment is placed in a cash-value account. At the start of the policy, the cash-value portion is a large portion of each payment. Later, as you age, the amount devoted to insurance coverage increases and the amount put toward increasing the cash value decreases.
As long as the policy is in force, the cash value not only continues to grow, it is tax deferred. You can even borrow against the cash value; however, unpaid policy loans will affect available benefits in the event of your death. If you cancel the policy during your lifetime, you will be entitled to the cash value, less any loans and minus surrender charges.