Understanding Coverage Types

Overview

Term life insurance provides coverage for a specific period, known as the “term.” Common term lengths are 10, 20, or 30 years. If the insured passes away during the term, the death benefit is paid out to the named beneficiary. If the term ends and coverage is not renewed, the policy expires without value.

When It's Useful

• Covering temporary needs such as a mortgage or car loan.
• Replacing income during working years to ensure dependents are financially secure.
• Providing funds for children's education or household expenses until retirement savings are sufficient.

Overview

Whole life insurance provides lifetime coverage, meaning the policy will remain in force for as long as premiums are paid. Unlike term insurance, it also builds cash value inside the policy, which grows at a guaranteed rate.

When It's Useful

• Estate planning, including covering final taxes and leaving a tax-free legacy.
• Providing lifelong protection for dependents with ongoing needs.
• Creating a guaranteed, tax-sheltered asset that can be accessed in the future.

Overview

Disability insurance protects your income if you become unable to work due to illness or injury. It provides monthly income replacement to help maintain your standard of living when you can't earn your regular paycheck. Coverage typically replaces 60-80% of your pre-disability income.

When It's Useful

• Protecting your ability to pay bills and maintain your lifestyle if you can't work.
• Covering ongoing expenses like mortgage payments, insurance premiums, and living costs.
• Preserving savings and retirement funds from being depleted during a disability.