Life insurance is an essential element in a properly designed financial plan. In a simple sense, it will ensure that your last expenses and debts get paid, and your family is cared for when you get gone.
But, not all forms that life insurance companies offer are to be the same. They can get classified into two types:
- Term Life Insurance
- Permanent Life Insurance
What Exactly Is Term Life Insurance?
A term life insurance type has a fixed premium for a predetermined period, such as 10 or 30 years.
When the term finishes at the end of the period, the premium is typically automatically renewed for a subsequent time of the same duration, which could cause sticker shock.
Premiums for renewal on life insurance policies with a term can easily be greater than the amount initially paid, based on your age when you first signed up for the procedure.
What Exactly Is Permanent Life Insurance?
Permanent life insurance is a category of insurance that is in effect throughout the time you live. Your life insurance plan will be honored if you are alive to the age of 120.
Some Examples of Policies That Are Permanent Are:
- Whole Life Insurance
- Universal Life Insurance
- Life Insurance with a Term to 100 Count. Yes, one kind of term life insurance policy gets designed to cover the long-term!
Benefits from Term Life Insurance
- Ideal for life insurance with short-term needs or certain liabilities such as mortgages
- It provides more immediate protection as it’s less expensive than life insurance, permanent.
- It is possible to convert it into life insurance with no medical proof, usually until age 65 or 70
Benefits to Permanent Life Insurance
- It protects your life if it is in force.
- The price of premium is generally constant regardless of health issues or age.
- The cash value can get borrowed to keep protection in case premiums are not paid or even canceled if the policy is no longer needed.
- Other non-forfeiture options allow the policyholder to choose from various options for continuation of coverage if premiums get not paid or if coverage gets terminated.
- If the policy participates in dividends, the procedure could be redeemed in cash or left to accrue interest or buy additional insurance.
The Disadvantages of Term Life Insurance
- If renewed, premiums rise as you age, and at the time, the increased cost of premiums could render it impossible or even impossible to keep insurance.
- The renewal of coverage will cease at some point. Typically, it’s at age 65 or 75.
- If premiums are unpaid, a policy is terminated after 30 days and will not get reinstated if health is not good.
- Usually, there isn’t cash value, and a non-forfeiture option is absent.
The Disadvantages of Permanent Life Insurance
- The initial cost could be excessive for the amount of security for your current needs.
- It might not be the most efficient way to cover short-term demands
- Cash values are typically smaller in the beginning. It is necessary to keep this policy for a lengthy period, for example, ten years, before cash value increases significantly.
For more information, call Ottawa Life Insurance at (613) 454-1424 or email info@ottawa-lifeinsurance.ca. We’re here to help you.
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