Question 1

What is life insurance?

Accepted Answer

Life insurance is a contract between an insurer and a policyholder in which the insurer guarantees payment of a death benefit to a named beneficiary when the insured dies. In exchange, the policyholder typically pays a premium, either regularly or in one lump sum.

Question 2

How much life insurance do I need?

Accepted Answer

The amount of life insurance you need depends on your individual circumstances, including your income, debts, dependents, and future financial goals. A common rule of thumb is 5-10 times your annual income, but it's best to consult with a financial advisor.

Question 3

What types of life insurance are there?

Accepted Answer

The main types are term life insurance and permanent life insurance. Term life provides coverage for a specific period, while permanent life, like whole life or universal life, provides lifelong coverage and often includes a cash value component.

Question 4

What is term life insurance?

Accepted Answer

Term life insurance provides coverage for a specific period or 'term,' such as 10, 20, or 30 years. If the insured dies within the term, the death benefit is paid to the beneficiaries. It's generally more affordable than permanent life insurance.

Question 5

What is whole life insurance?

Accepted Answer

Whole life insurance is a type of permanent life insurance that provides coverage for your entire life. It has a guaranteed death benefit, builds cash value over time, and usually has fixed premiums.

Question 6

How do I choose the right life insurance policy?

Accepted Answer

Consider your financial goals, budget, the length of coverage you need, and whether you want a cash value component. Comparing quotes from multiple insurers and consulting a financial advisor can also help.

Question 7

What is a beneficiary?

Accepted Answer

A beneficiary is the person or entity designated to receive the death benefit from a life insurance policy when the insured person dies.

Question 8

Are life insurance premiums tax-deductible?

Accepted Answer

Generally, life insurance premiums are not tax-deductible for individuals. However, the death benefit paid to beneficiaries is typically income tax-free.

Question 9

Can I change my life insurance policy?

Accepted Answer

Depending on the type of policy, you might be able to make changes like updating beneficiaries, adjusting coverage amounts (with underwriting approval), or converting from term to permanent life insurance.

Question 10

What happens if I stop paying my life insurance premiums?

Accepted Answer

If you stop paying premiums on a term life policy, the coverage will lapse. For a permanent policy with cash value, the insurer might use the cash value to keep the policy in force for a period, or you might be able to take a reduced paid-up option.

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