Frequently asked questions

What is life insurance?

Life insurance is a contract between an individual and an insurance company, promising to pay a beneficiary a sum of money upon the policyholder’s death, in exchange for premium payments.

Why do I need life insurance?

Life insurance provides financial protection to your loved ones in the event of your death. It helps cover funeral expenses, debts, and offers ongoing income support for your family.

What are the main types of life insurance?

The two primary types are term life insurance, covering you for a set period, and whole life insurance, offering lifetime coverage and often includes a cash value component.

How much life insurance do I need?

The amount of life insurance you need depends on your income, debts, dependents, and financial goals. A common guideline is a policy 10-15 times your annual income.

What factors affect life insurance premiums?

Factors affecting premiums include age, health, lifestyle, policy type, coverage amount, and policy term.

Can I have multiple life insurance policies?

Yes, you can have more than one life insurance policy, a strategy known as "laddering," which provides flexibility and matches coverage to changing financial needs.

What happens if I miss a premium payment?

Most policies have a grace period for missed payments. If payment isn’t made within this period, the policy may lapse. Permanent policies might use the cash value to cover missed payments.

Is life insurance taxable?

Life insurance death benefits are generally not subject to income tax. However, large estates may be subject to estate taxes.

Can I borrow against my life insurance policy?

Some policies, especially whole life insurance, allow borrowing against the cash value. This reduces the death benefit and may have tax implications.

How do I choose a beneficiary?

A beneficiary can be anyone you choose, such as a family member or friend. It’s important to keep your beneficiary designation updated to reflect current wishes.