Understand The Importance Of Safeguarding Your Families Future And Prepare For The Unexpected
Life insurance is a financial product designed to provide a sum of money, known as a death benefit, to designated beneficiaries upon the death of the insured person. It serves as a way to protect the financial security of loved ones in the event of the policyholder’s passing.
The primary purpose of life insurance is to replace the income or financial support that the insured provides to their dependents. It helps beneficiaries cover expenses such as mortgage payments, living costs, education expenses, and other financial obligations that they would have difficulty paying on their own.
Life Insurance Provides:
- Financial Security: Life insurance provides a lump-sum payment to your beneficiaries, helping them cover expenses such as mortgage payments, living expenses, education costs, and more.
- Peace of Mind: Knowing that your loved ones will be financially protected can alleviate stress and provide peace of mind during difficult times.
- Financial Security: Life insurance provides a lump-sum payment to your beneficiaries, helping them cover expenses such as mortgage payments, living expenses, education costs, and more.
- Peace of Mind: Knowing that your loved ones will be financially protected can alleviate stress and provide peace of mind during difficult times.
Types Of Coverage
Term Life
Term life insurance provides coverage for a specified period, typically ranging from 10 to 30 years. It offers protection for a specific term, and if the insured individual passes away during the term of the policy, a death benefit is paid out to the designated beneficiaries.
Best know for its affordability and flexibility, term life allows one to choose a coverage amount and term length that meets their needs. Often at the best price.
Whole Life
Whole life insurance is a type of permanent life insurance that provides coverage for the entire lifetime of the insured individual, as long as premiums are paid according to the policy terms. Unlike term life insurance, which offers coverage for a specific term, whole life insurance offers lifelong protection and includes a savings component known as cash value.
Whole Life policies offer level premiums, dividend options and guaranteed benefits.
Universal Life
Universal life insurance is a type of permanent life insurance that offers flexibility in premium payments, death benefits, and savings accumulation. It combines elements of both life insurance and investing, allowing policyholders to tailor their coverage and premiums to meet their evolving financial needs and goals.
Life insurance plays a vital role in providing financial security and peace of mind to individuals and families, ensuring that their loved ones are protected against the uncertainties of life. It’s essential to carefully consider your financial needs and goals when choosing the right life insurance policy.
When the time is right, we are here to help you find a product that best suits your wants and needs
Life Insurance FAQ’s
Term life is ideally suited for short term needs as you can lock in the lowest rate today for the length of the term. Popular products are 10 and 20 year term. These products are ideal when you want the most coverage possible today at the lowest price. The insurer promises to pay the face amount on death in exchange for the set premium during the term.
The downside of Term Insurance is it renews at a significantly higher rate and or cancels at the end of the term. Some folks can be priced out of their insurance in the future and or their health changes and you become uninsurable during the term.
Universal life is ideal for people that want some flexibility in the payment of premiums. It offers the ability to potentially build internal policy equity which is invested inside the policy to be used to pay premiums, withdrawn as cash, borrowed against and or leveraged as collateral. At one time universal life was marketed as flexible life. You can use some of the flexibility provided by your internal fund value to help accomplish some of life’s objectives. The customer has flexibility in the premiums terms and can choose annual renewable term, term to 100 cost base and or paid up terms like 20 year paid up options.
You can also pay extra within government rules or take premium holidays as long as you have internal funds values. Someone that does not want the cost of insurance to increase can benefit over time from the fixed premium rate.
The downside to universal life is you are generally paying more in early years when compared to term insurance. The various options on investments, premium periods, bonuses and death benefits can be confusing to some people and it is important that you understand your product. These could also be considered as positive though. Universal life generally has high cash surrender charges in early years on fund values and for this reason it should be a long term purchase decision.
Whole life is ideally suited for long term insurance needs. A level premium is set and the beginning of the policy and does not increase over time. Policies can be participating or not. Participating policies benefit when the insurer is profitable and additional dividends are credited to the policy values. The insurer invests the additional fund values and your equity performance is dependent on their performance. You do not have the investment decisions like a universal life policy. Dividends can be used to purchase additional paid up insurance also known as paid up additions. In the future you can use dividends to pay the premium and keep the insurance in force. This is called premium offset You can withdraw, borrow and or cash in a policy to access the equity of a whole life policy. Dividends can also be paid in cash. This is the premium product for long term insurance coverage without rising premiums.
Whole life is costly initially when compared to term insurance and it can be unaffordable for many people to be properly insured relative to their need. Dividends and Cash values can be small to non existent in early years and this product should not be purchased for short term needs. Many people start to think of these policies as investments due to the equity build up but they should be considered an insurance policy first with features. It should not be used as a first line investment fund it is insurance and treated as such.
Everyone is different, has different objectives and needs. What is best for you is dependent on your objectives. You can have one type and or a combination of the types. The solution to your needs is probably evolving overtime anyways and perhaps that is why the word life is here, it is for your life and the ones you love.
With whole life insurance you do get Guaranteed premiums with a basic coverage plan while term life insurance generally includes premiums for an initial period. Universal life insurance varies.
While term and universal life insurance may or may not have a guaranteed cash value, whole life does and may also have additional non-guaranteed cash values related to dividends.
Yes, all life insurance policies have a guaranteed death benefit called the “Face Amount”. ie $500,000, $250,000, $100,000 etc.
Universal Life, and Whole Life may have additional death benefits in accordance with investment options and cash values.
- Term life – No
- Universal life – Yes, there is a variety of guaranteed, fixed-income, index-linked and mutual fund-linked interest options from which to choose from
- Whole life – No, but while the company’s investment division manages the participating account assets, you get the choice to do what you want with the dividends.