What is Life Insurance?
Life insurance is an important part of the financial planning portfolio and something every individual should have at some point of their life. Coverage can vary in values, options and legalities, but its purpose is always meant to provide for dependents in the event of death.
There are two types of Life Insurance policies: Term Life and Permanent Life. Within permanent life, there is Whole Life and Universal Life.
A Term Life Insurance policy is the period of time during which the coverage is guaranteed to remain in place. Terms can range from one year to thirty years and many numbers in-between. The years of the term specifies that the premium (cost) will remain level for the term specified and as long as the premiums are paid, the coverage will pay out the death benefit.
Whole Life Insurance is a type of permanent coverage that provides coverage for the entire lifetime of a life insured, with a premium that remains level over the course of the contract. Whole Life builds up a cash value over time, and the policyholder can use that value towards future premiums or as a means of accessing cash later down the road.
Universal Life Insurance is also a type of permanent coverage. It allows the policy to act as an investment and a way to tax shelter money as one can invest more than the basic premium into this policy and have their investment grow in a tax-sheltered vehicle.
This is a very basic description to help one begin to understand life insurance and its importance. For more information, please contact
Samuel Waxman, CFP, CLU, CHS 416.817.8897 firstname.lastname@example.org 201-515 Consumers Road, Toronto, Ontario, M2J 4Z2 millennialfinancialgroup.com