Life Insurance

Life Insurance

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What is Life Insurance? Why do I need Life Insurance?

  • Term Life Insurance

    Term insurance provides a preset amount of cash if you die while the policy is in force. For example, a ten-year $250,000 term policy pays off if you die within ten years. If you live beyond the end of the term, your beneficiary does not receive a death benefit. With term insurance, you pay only for life insurance coverage; the policy does not grow cash value.

    It’s inexpensive if you are younger. Term insurance is the cheapest form of coverage over a limited number of years, especially when you’re younger. It is particularly suitable for younger parents who want substantial insurance coverage at lower cost. Since the risk of dying in your 20s, 30s or 40s is quite low, the cost of term insurance during these years is as reasonable as life insurance prices get.

    It’s good if you need insurance for a short time period. Also, if you need insurance for only a short time, say to qualify for a business loan, term insurance is a good option.

    The older you get, the more expensive the premiums. However, the older you are, the more expensive term insurance premiums become compared to the payoff value of the policy. This, of course, is understandable, as the older you are, the greater the chance you will die during the policy term.

  • Whole Life Insurance

    Whole-life is a type of permanent insurance, which combines life insurance coverage with an investment fund. Whole life is a policy that pays a stated, fixed amount on your death, and part of your premium goes toward building cash value from investments made by the insurance company. Cash value builds tax-deferred each year that you keep the policy, and you can borrow against the cash accumulation fund without being taxed. The amount you pay typically does not change throughout the life of the policy.

  • Universal Life Insurance

    Universal life insurance is a type of permanent life insurance. Under the terms of the policy, the excess of premium payments above the current cost of insurance is credited to the cash value of the policy. The cash value is credited each month with interest, and the policy is debited each month by a cost of insurance (COI) charge, as well as any other policy charges and fees which are drawn from the cash value, even if no premium payment is made that month. Interest credited to the account is determined by the insurer, but has a contractual minimum rate.

  • Key Man/Person Insurance

    Key Man or Key Person Insurance is an important form of business insurance. There is no legal definition for “key man/person insurance”. Generally speaking, it is an insurance policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of an important member of the business. In other words, Key Man Insurance is a standard life insurance that is used for business succession or business protection purposes. The policy’s term does not extend beyond the period of the key person’s usefulness to the business. Key Man Insurance policies are usually owned by the business and the aim is to compensate the business for losses incurred with the loss of a key income generator and facilitate business continuity. Key person insurance does not indemnify the actual losses incurred but compensates with a fixed monetary sum as specified on the insurance policy.

    Many businesses have a key person who is responsible for the majority of profits, or has a unique and hard to replace skill set such as Intellectual Property that is vital to the organization.