Life insurance is a contract that pays a sum of money to a designated beneficiary or beneficiaries when the policyholder passes away, provided that all policy terms are met.

Life insurance provides financial security to your beneficiaries, helping them maintain their lifestyle or cover essential expenses in your absence, such as debts or childcare costs.

The main types include term life insurance, whole life insurance, universal life insurance, variable life insurance and specific policies, like burial/final life expense and mortgage payoff life insurance. 

Yes, life situations can change unexpectedly. Securing life insurance early can lock in lower rates, and you can update beneficiaries as needed. It can also cover debts and end-of-life expenses.

Term life insurance covers you for a specific period and is generally less expensive, while whole life insurance offers coverage throughout the insured’s entire life and includes an investment component that builds cash value. 

Yes, there are life insurance plans available that do not require a medical exam, though options and premiums may vary based on your age and health.

Consider your financial needs, the needs of your dependents, your health and potential future obligations. Consulting with a life insurance broker can help tailor a policy to your specific circumstances.

Typically, you lose your employer-provided life insurance when you leave your job, which is why it’s beneficial to have an individual policy.

Life insurance can support expenses like childcare and debt payments that arise if a non-primary breadwinner passes away, ensuring the family’s financial stability.

This is a type of permanent life insurance that covers two people on one policy, with the death benefit payable after both have passed away. It’s often used to provide for children or other dependents after the death of the policyholders.

Generally, life insurance death benefits are paid out to beneficiaries tax-free. There are certain situations that could trigger taxation. These may include the Goodman Triangle, when three different individuals fill the roles of policy owner, insured, and beneficiary; and when life insurance proceeds are part of a particularly large estate.

If the life insurance policyholder is also the person who’s insured, it’s easier to avoid incurring taxes on the death benefits of a life insurance policy.

If the beneficiary chooses to receive a life insurance payout in installments, or if the beneficiary delays a life insurance payout, the life insurance proceeds may generate interest. That interest may be subject to taxes when it’s withdrawn or applied to future life insurance premium payments.

Yes, this may be possible by transferring ownership of a life insurance policy to an insurance trust. When choosing this option, the life insurance policyholder must survive for at least 3 years after the transfer in order to exclude the proceeds from the taxable estate.

There may be certain taxable event triggers on a permanent life insurance policy, including policy surrenders and withdrawing the cash value for more than the premiums paid. Any gains, such as dividends, that are withdrawn from a policy’s cash value are taxable as ordinary income. 

A life insurance retirement plan (LIRP) provides both life insurance coverage, as well as offers a retirement fund. Unlike traditional retirement savings plans, such as an individual retirement account (IRA), there are no contribution limits for an LIRP. This can make a LIRP a worthy option to consider for retirement savings. 

With a LIRP, there are tax advantages, such as the option for tax-free withdrawals and tax-deferred growth. An LIRP can complement traditional retirement savings, to help investors diversify their retirement plan savings for a more secure financial future.

Yes, depending on the type of life insurance plan you have, you may be able to borrow against it. If you have a permanent life insurance policy with cash value, such as a whole life insurance policy or universal life insurance policy, you can borrow from the mature cash value. 

Life insurance policy loans may offer benefits such as favorable interest rates and more flexibility with loan repayment. You may have up to 90% of the life insurance policy’s cash value available to borrow as a loan.

After your life insurance policy has accumulated sufficient cash value, you can contact your life insurance company to initiate a loan.