Life insurance provides financial protection for your loved ones or business partners in the event of your passing. It ensures that those you leave behind have the support they need to maintain stability and cover expenses. As long as your policy remains active and premiums are paid, your coverage stays in effect.
What is life insurance?
Basically, life insurance is the contract between you and insurer where the insurer agrees to pay a certain sum to a designated beneficiary upon your death. Certain policies also payout in the event of critical or terminal illness. As the policy holder, you pay timely premiums to keep life insurance in effect. Some policies cover additional expenses upon your death, such as the cost of your funeral. Other life insurance policies simply payout a particular lump sum when you die.
Why do I need life insurance?
What is term life insurance?
Term life insurance provides a certain benefit should a designated event occur. In most instances, payment is made in a lump sum upon your death or terminal illness. The insurance contract exists for a specified term, such as ten or twenty years.
What is whole life insurance?
Whole life insurance also pays out in the event of an event such as death or illness. This type of life insurance is also used as a type of investment product since the payment of premiums facilitates the growth of capital.
Should I invest in term life insurance or whole life insurance?
Term life insurance does not have cash value and therefore typically costs less than whole insurance. The proceeds of term insurance are not paid out until your death or illness. Whole life insurance tends to be more expensive but you can cash out at certain times during the policy. Some view it as a type of savings account they can depend on during emergencies. However, cashing out lowers the sum paid upon your death.