Life Insurance

Life insurance is a product designed to provide a measure of financial protection to your beneficiaries in case you pass away. It is a crucial part of financial planning that acts as a safety net for preparing for the unexpected so that whatever happens, you can continue providing for your loved ones.

A life insurance policy is a legally binding contract between an insurance company and a policyholder where the policyholder pays regular premiums in exchange for a death benefit paid to the plan's beneficiaries. The policy may be sufficient to replace your previous income, and cover costs your family members may face, such as funeral costs, college fees, and even taking care of an older family member.

Pros of Permanent Life Insurance

Lifetime Coverage

You never lose coverage after a set number of years as long as you keep paying the premiums.

Tax-deferred Growth

You can build up the cash value over a period of time and then borrow against it without paying taxes.

Accelerated Benefits

You don't necessarily have to wait until you pass away to get benefits from permanent life insurance. In case of a terminal illness, you may be able to access between 25% up to 100% of your benefits to pay for the medical bills.

Cons

• There is a higher premium requirement.
• If you pass away with a loan outstanding, there are tax implications to the beneficiaries.
• Accelerated benefits and loans reduce the amount of proceeds given to the beneficiaries.

Pros of Term Life Insurance

• Term life insurance is inexpensive since it has lower premiums.
• It allows flexibility as you can choose how long you want to be covered.

Cons

• No cash value hence no investment component.
• If you are still alive when the term ends, there is no benefit.

A traditional long-term care policy provides coverage for long-term care needs and has no life insurance benefit.

A hybrid policy is a policy that provides long-term care coverage and a life insurance benefit.

There are life insurance options available for people above 65 years. Factors to consider include cost and how much coverage you can buy. Insurers, however, often charge high premiums because of age and health, but you can buy a guaranteed issue policy up to age 85 without taking a medical exam.

If you are the insured and the owner of the life insurance policy, it would be included in your estate.

The life insurance exemption statute states that the lawful beneficiaries of a life insurance policy shall be entitled to the proceeds of the policy against the creditors of the insured.

Most life insurance policies become effective on the day coverage begins.

When deciding on which life insurance company you would like to get a life insurance policy from, looking into their reputation and financial stability is of utmost importance. It is strongly recommended that you work with a highly-rated company to check the performance of your policy. Consulting a professional will keep things organized and help in the reduction of stress and anxiety.