Life Insurance

Life insurance is a financial protection product that provides a tax-free lump-sum payment, known as a death benefit, to designated beneficiaries when the insured person dies. It is designed to replace income, pay debts, cover final expenses, or provide financial stability for dependents and loved ones. Life insurance helps ensure that family members can maintain their quality of life and meet ongoing financial obligations even after the loss of the primary earner.

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There are two main types of life insurance: term life insurance, which provides coverage for a specific period such as 10, 20, or 30 years, and permanent life insurance, which provides lifelong protection and may include a savings or investment component (such as whole life or universal life). Premiums are based on factors such as age, health, lifestyle, and coverage amount.

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Example:

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If you purchase a $500,000 term life insurance policy with a 20-year term, your beneficiaries will receive the full $500,000 tax-free benefit if you pass away within that period. If you live beyond the term, coverage ends unless you renew or convert the policy.

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What to Watch For:

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Review your policy regularly to ensure it aligns with your current financial goals and family situation. Missing premium payments can cause the policy to lapse, ending coverage. For permanent policies, understand how the cash value and investment features work, including fees and potential tax implications. Always confirm your beneficiary designations are up to date.