Life insurance is a financial product that helps ensure the financial security of your loved ones. In other words, when the insured person dies, a cash amount is returned to the beneficiaries who have been named under the insurance policy.
Why consult an insurance broker?
An insurance broker can help you assess your needs, so you can choose the coverage that’s best for you. Your broker can also advise you, if you already have a life insurance policy, and are considering a switch.
Here are some tips for making an informed choice regarding a Life Insurance policy:
Establish your goals
The ideal life insurance product for you exists. You just have to take the time to find it. By establishing the goal that prompts you to purchase a life insurance policy, you will better know the type of protection and the face amount you need.
For example, you may want to leave an amount for your loved ones to pay for funeral expenses when you die. You may also want your loved ones to maintain the standard of living they are used to with this amount. Or you may want to leave a legacy or donate on your death.
- Whatever your goals, it’s critical to be clear about what you want before you start looking for life insurance.
- It is also important to learn about the types of life insurance available and which one best meets your goals.
There are several types of life insurance.
Term life insurance:
This type of life insurance offers limited protection, approximately for 10, 15, 20 or 30 years. This type of protection offers several options, such as a renewal guarantee or a conversion privilege. By opting for a renewal guarantee, you can renew your policy when it expires, without taking into account changes in your health. The premiums may, however, increase with the age of the insured person. The conversion privilege, on the other hand, allows you to transform a term insurance policy into a permanent policy.
Whole life insurance:
This type of life insurance remains in effect for your entire life. The premium, the cash value (if applicable) and the capital paid on your death are guaranteed. The cash surrender value is the amount that the policy owner can recover from their insurance company if the policy is canceled. Some whole life insurance policies allow premiums to be paid for a specified period. When this period ends, the policyholder still has insurance protection, but no longer has to pay a premium.
Please note: Initially, a term life insurance policy costs much less than a whole life policy. On the other hand, if you live long, whole life insurance is more economical over time.
Universal life insurance:
This type of life insurance combines life insurance protection and savings. This insurance can be useful to you, for example, as an additional investment for your retirement. Usually distributions under this form of life insurance and on a non-taxable basis. Please consult a tax specialist.