Term Life Insurance
The term life insurance policy is a kind of life insurance valid for a specific time. In the case of your death, a fixed and tax-free amount will pay to those you select as your beneficiaries. In addition, many policy types of term insurance can also change into permanent life insurance to provide an equivalent or less extent of protection. It is simpler and less costly. Short-term life insurance policies are the top choice for most people.
The name suggests that term life insurance runs for the period that you have that you agree with your insurance company. If you continue to make payments on your insurance, you get protected for the duration stated in the contract.
If you think you will be financially secure in the future, It’s safer to think about term life insurance which will end when you’re still alive. If not, consider that an insurance policy for life will cost more once you’re older.
Benefits and Drawbacks of Term Life Insurance
Benefits
- The term life insurance policy is simple to comprehend.
- It’s also the most affordable type of insurance.
- You can end an insurance contract for life and not lose any funds.
Drawbacks
- When the period for coverage expiration has passed, you are no longer protected. If you renewed your insurance at a higher price, that would be beneficial.
Permanent Life Insurance
Permanent life insurance is a type of coverage that, as the name implies, will protect you if you do not pay the insurance premiums.
The distinctive feature of life insurance with a permanent term is the cash surrender value, which is a cash value that works as an investment that grows at a low-interest rate. The amount that goes to this cash value is a percentage of the premium you pay for insurance.
Therefore, permanent life insurance blends its protection with an investment you can withdraw in various ways based on your specific needs.
Although many people prefer to keep their investments and insurance policies separate, the cash value has some advantages, including preserving money because it is an investment with a mandate. Also, buying a life insurance policy with no cash surrender value is possible if you are looking for a life insurance policy at a lower cost.
Benefits and Drawbacks of Permanent Life Insurance
Benefits
- Permanent life insurance will not expire as long as you pay the premiums.
- It helps you save money by utilizing its cash value.
Drawbacks
- Costlier than term insurance by ten times or more.
- Many consumers purchase too little insurance or decide to cancel their life insurance after a few years due to the high cost.
- The interest rate for your cash surrender amount is generally lower than that for regular investments.
- Permanent life insurance is more complex.
In both cases, Term or Permanent Life Insurance policies can get owned by an individual or an organization. Most corporate policies cover the life of a significant person in buy/sell agreements and protect the retirement plans insured. You receive life insurance assistance from Ottawa Life Insurance. Contact us at (613) 454-1424 or email at info@ottawa-lifeinsurance.ca for further details.
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