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Leave a Legacy

May 07, 2020

Protect your family or your business

Whether you are married or a parent, the death of one adult means the loss of one of your household’s income. This could result in financial hardships and you may no longer be able to afford your loan payments, any caregiving, tuition, or maintenance. Life insurance policies can assist in paying off debts and other expenses. 

Basically, your life insurance policy acts as a safety net, in exchange for your premium paid, the insurance company will pay a lump sum commonly referred to as a “death benefit” to your beneficiaries in the event of your death. These funds paid to your beneficiaries can be used for any purpose of their choosing. 

How to Choose a Life Insurance Policy Type?

There are three primary types of life insurance, term life, whole life or universal life. A good place to begin is by deciding which is better for you. 
  • Term life insurance policies will provide you with cover for a specific amount of time. This policy does not offer any cash value or savings component as found in whole life products. One option this type of policy can be considered for is “income replacement” if you wish to be covered during your working years. It is also beneficial if you budget is limited.
  • Whole life insurance policies, however, will last for the duration of your life. It offers a cash value component and is an effective way to leverage your money. Upon death, beneficiaries are paid the policy’s death benefit, not the death benefit plus cash value. Any cash value that the policy may have generated automatically goes back to the insurance company. However, there are some policy types that will offer the death benefit plus cash value, at an increased cost.
  • Universal life insurance policies are permanent with more flexibility with an investment savings component. Upon an insured’s death, beneficiaries will receive the death benefit.
Key Points
  • Term life insurance guarantees payment of a specified death benefit to the insured's beneficiaries during a specified term.
  • These policies have no value other than the guaranteed death benefit 
  • Whole life insurance offers guaranteed cash value accumulation.
  • You can borrow against the cash value of a whole life policy.
  • A universal life insurance policy can accumulate cash value & beneficiaries receive the death benefit.

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