Life insurance is a financial product designed to provide monetary support to your loved ones or beneficiaries after your passing. It can offer peace of mind and ensure that expenses such as funeral costs, outstanding debts, and the future financial needs of your dependents are covered. There are two main types of life insurance:
- Term Life Insurance:
- Covers you for a specific period (e.g., 10, 20, or 30 years).
- Typically more affordable with fixed premiums during the term.
- Payout occurs only if you pass away during the term.
- Permanent Life Insurance (e.g., whole life, universal life):
- Provides coverage for your entire life as long as premiums are paid.
- Includes a cash value component that can grow over time and may be accessed or borrowed against.
- Usually has higher premiums compared to term life insurance.
Why Life Insurance?
- Protect Loved Ones: Ensures your family has financial support in your absence.
- Pay Debts: Covers debts like a mortgage or personal loans.
- Funeral Expenses: Handles end-of-life costs.
- Inheritance or Estate Planning: Leaves a legacy or offsets estate taxes.
Factors to Consider:
- Your financial obligations (e.g., dependents, debts, or future costs like education).
- Current income and savings.
- Premium affordability and health status (insurance costs vary by age and health).