A lot of people find life insurance a complicated subject, as no one taught us about life insurance in the schools. In adulthood we suddenly get a lot of responsibilities on us and find out by life insurance. But there is no clarity regarding what life insurance is and its terms and conditions. In this article we will be further understanding the basics of Life Insurance.
- What is Life Insurance?
Life Insurance is the Insurance which is given against the life of someone. It is a contract done between the insurance policy holder and the insurance company in which the insurance company takes a premium and offers a sum of money in case of death of the insured person or after some period of time. For more details you can consult the best insurance broker in Calgary.
- How is Life Insurance helpful?
Life Insurance gives peace of mind to the insurance holder and provides financial assistance to his/her loved ones in the case of death of the insurance holder. It provides them with tax free a whole big amount which is known as the death benefit. This benefited amount can be used for the:
- Offering them daily income to maintain their standard of living.
- Provide financial assistance for your children and dependents
- Pay off your debts
- Pay for your funeral expenses
- Make a donation
- Types of Life Insurance?
There are basically two types of life insurance:
- Term Life Insurance
- Permanent Life Insurance
- Term Life Insurance: In the Term Life Insurance it provides insurance for a specific period of time or term. The numbers of years which can come in term range between 10 years to 40 years or for a certain age, most probably till the 65 years of age. It is further divided into two categories:
- Traditional term life insurance: It is one of the most popular and affordable types of life insurance. It is a standard term policy which lasts for a certain number of years.
- Annual Renewable term life Insurance: It is a type of life insurance which lasts for one year and gets renewed every year. In this type of insurance the premium pay starts on a low level and can increase a lot over time.
- How is term life insurance?
In term life insurance you pay a particular premium to an insurance company for a particular set of years and in exchange they offer a particular set of amount which is given to the beneficiary in case of your death within the term period.
- Pros of term life insurance:
- Affordability: Lower premium needs to be paid compared to permanent life insurance.
- Simplicity: Easy to understand compared to other life insurance
- Flexible term: Life term insurance offers flexible terms.
- Cons of term life insurance:
- Temporary coverage
- No cash value
- Renewal cost
- Permanent Life Insurance:Permanent Life Insurance is the type of insurance in which you continue to pay the premium as long as you are living. This insurance covers you for your entire life.
- How does permanent life insurance work?
IN permanent life insurance, some part is used for the saving or investment as well, some part of the premium is used to pay for the investment. It helps in generating cash value which can be assessed by the policy holder as needed by him/her. It can be used by the policyholder in retirement through partial or full withdrawal. The premium on the permanent life insurance is higher than other types of insurance policies such as health insurance by the best health insurance broker in Canada.
- Pros of permanent life insurance:
- Lifelong coverage
- Cash Value
- Fixed Premium
- Dividends
- Cons of permanent life insurance:
- High Cost
- Complexity
- Lower Returns
So these are the basic information regarding life insurance. If you still have some queries then it is advisable to consult the best insurance broker in Calgary. As they have great knowledge and expertise in this field and guide you with the right policy as per your need and demand.
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