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Life Insurance

A life insurance policy enables an insurance provider to arrange for a lump-sum or incremental cash payout to the policy beneficiaries after the policyholder passes away, (called a death benefit), in exchange for regular premium payments.

What is called “term life” is protection for a pre-set period of time, while a more permanent form of insurance called “whole life” or “universal” provides a lifetime of coverage. It’s important to note that the benefits received upon death of the policyholder are often tax-free.

Term life is designed to provide financial protection for a definite time-period, usually for a period of 10 to 20 years. Under normal circumstances premiums are consistent during the time of coverage. It is important to keep in mind that term life is usually a more affordable option over whole life insurance policies.

Whole life is a kind of permanent life insurance that is designed to provide coverage over one’s entire lifetime. As a result, whole life has higher premiums than a term life policy. The premiums of this kind of policy are usually fixed. It is different from term in that whole life also provides a cash value, much like a savings account does and can also provide tax-deferment for the amount of interest that is earned over time.

When an individual decides to obtain life insurance for themselves or another person, they will contract with a provider for one or another of these various kinds of coverage. The insurance company will calculate policy prices based on the applicant’s information. Questions such as the applicant’s health history and other lifestyle parameters are taken into account and the professional will use mortality tables to calculate a life expectancy to aid in determining the cost of the policy. The policyholder will pay the agreed upon premiums to fulfill their part of the contract. Upon death of the insured person, the insurance provider will normally require a notarized death certificate or some other proof of death before paying out the claim. Payment of the benefit may either be in lump sum or in installment payments depending upon the contract.

Speak with one of our insurance professionals for more details on all these options.