Life insurance is an integral part of financial planning, and it involves creating provisions for you loved ones. Life insurance can guarantee financial security to your family members and those who are dear to you like your children, spouse, and dependent parents. Life insurance will help you prepare for life's uncertainties, giving you and your family peace of mind.
Life insurance provides a cash benefit to pay bills such as mortgage, business commitments, college bills, medical bills, car payments, and other expenditures.
There are two main types of life insurance:
1.Term life insurance
2.Permanent Life insurance
The type of insurance you choose depends on your personal financial goals and that of your family.
However, there are striking differences between the Term life insurance and Permanent Life insurance.
Term insurance, in the event of death, the policy holder’s beneficiaries get a substantial sum of money within a specified period, which range from 5 to 30 year terms. However, if the policyholder does not die within the given term, the beneficiary will not be paid the death benefit by the insurance company. Therefore, the payouts for Term life insurance are higher for less money. Term life insurance is the most affordable option, and can be strategic to financial planning, and family protection.
Permanent Life Insurance is a whole life policy, or universal life policy , they both are are paid like you would pay a mortgage to a specified date. The policies never expire as long as they are paid to stay enforce. Permanent life insurance policies can be set up as a cash resource, and avoid taxes as a policy loan to help in your financial planning. Permanent life insurance is priced higher than term life insurance for the cost of ownership.