Is life insurance dead on arrival?

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According to Investopedia, life insurance is a pledge between a policy holder and an insurer. The insurer promises to pay a benefactor a sum of money upon the death of an insured party. Other events such as terminal/critical illness may provoke payment. The policy holder normally pays a regular premium or a lump sum. The advantages may include other expenses, such as funeral costs. Vitality insurance is designed to shield families against economic hardship when their main provider croaks and takes one of two forms: permanent insurance (forever) and term life insurance (over a set period).

Like an umbrella on a rainy day, life insurance is for those who need it most when we’re gone.

Collateral provision can be a blessing in disguise. A positive of term insurance is lower cost versus permanent insurance, as coverage companies accrue less risk since you’re insured for a set period of time. Buying premiums when you’re healthy also keeps costs down. Wave hello to peace of mind knowing your family is safeguarded should your demise arise unexpectedly. You can even extend your term life policy indefinitely by converting to permanent coverage. Doing so may up premiums but it can be a solid investment if seeking coverage indefinitely. Converting could also give you the chance to collect cash value.

There are drawbacks to consider. Should you outlive your contract, the policy expires. Neither you or your loved ones obtain any money. It’s also mentally taxing, being an annual reminder of your mortality. Loans or accelerated incentives could lessen any benefit paid out to your beneficiaries when you perish.