Life Insurance

Types of Life Insurance Plans

Term life insurance provides coverage within an established period of time. If the covered individual dies during the coverage period, the beneficiaries will receive a benefit. Once this coverage period has ceased, the policy ceases to provide coverage.

Permanent life insurance covers the policy holder's entire lifetime. The premiums are paid up to a maturity date that occurs when the paid amount matches the death benefit of the policy. There has been a battle between the term versus the permanent life insurance policies as to which ones are ideal for people to choose.

Pros of Permanent Life Insurance

Lifetime Coverage

You never lose coverage after a set number of years as long as you keep paying the premiums.

Tax-deferred Growth

You can build up the cash value over a period of time and then borrow against it without paying taxes.

Accelerated Benefits

You don't necessarily have to wait until you pass away to get benefits from permanent life insurance. In case of a terminal illness, you may be able to access between 25% up to 100% of your benefits to pay for the medical bills.

Cons

1. There is a higher premium requirement.
2. If you pass away with a loan outstanding, there are tax implications to the beneficiaries.
3. Accelerated benefits and loans reduce the number of proceeds given to the beneficiaries.

Pros of Term Life Insurance

1. Term life insurance is inexpensive since it has lower premiums.
2. It allows flexibility as you can choose how long you want to be covered.

Cons

1. No cash value hence no investment component.
2. If you are still alive when the term ends, there is no benefit.

Long-term Care

A traditional long-term care policy provides coverage for long-term care needs and has no life insurance benefit.

Hybrid Policy

A hybrid policy is a policy that provides long-term care coverage and a life insurance benefit.

Life Insurance for Seniors

There are life insurance options available for people above 65 years. Factors to consider include cost and how much coverage you can buy. Insurers, however, often charge high premiums because of age and health, but you can buy a guaranteed issue policy up to age 85 without taking a medical exam.