Life insurance is a contract in which an insurer guarantees payment of a death benefit to named beneficiaries upon the insured’s death. It is a type of insurance that helps protect your loved ones financially if you die.
Life insurance is an important financial planning tool for many people, as it can help ensure that their loved ones are financially secure in the event of their death.
It can help cover funeral and burial expenses, pay off debts and mortgages, provide for children’s education, and maintain a family’s standard of living.
If you are considering purchasing life insurance, it is important to carefully consider your needs and budget and to shop around to find the best policy.
Three Main Types of Life Insurance;
Term life insurance:
Term life insurance provides coverage for a period, such as 10, 20, or 30 years. If you die within the policy’s term, the insurer pays the death benefit to your beneficiaries. If you outlive the policy’s term, the coverage ends, and you are no longer protected.
Term life insurance is generally less expensive than permanent life insurance, but it does not build cash value and does not provide ongoing protection beyond the initial term.
Permanent life insurance:
Permanent life insurance, also known as whole life or universal life insurance, provides coverage for the entirety of your life as long as premiums are paid. In addition to the death benefit, permanent life insurance also builds cash value over time, which you can borrow against or withdraw. Permanent life insurance is generally more expensive than term life insurance because it provides ongoing protection and cash value accumulation.
Group life insurance:
Group life insurance is coverage provided to people, typically through an employer or other organization. Group life insurance is usually less expensive than individual life insurance because the insurer spreads the risk across a large group of people. However, group life insurance may not provide as much coverage as an individual policy, and it may not be portable if you leave the group.