What is Life Insurance?

In the previous blog, mortgage insurance was discussed and explained further. In this blog, we will be discussing what life insurance is and how it varies from mortgage insurance.

What is Life Insurance?

Life insurance is insurance for if you pass away, similar to mortgage insurance. The difference is that the money you receive will go towards your heirs, such as family, instead of going directly to your mortgage. Life insurance is more flexible for your family, as they can use the funds for various things instead of just your mortgage. It can give them a bit of financial stability during such a difficult time.

Benefits of Life Insurance

There are many benefits to life insurance, making it an excellent option for you and your family.

Terminally Ill Life Insurance Payment

Although this is not as common, you can get your life insurance money if you are chronically or terminally ill. In most cases, you can receive your life insurance money if you are not expected to live for more than 12 months. If you apply in this category, you can receive your death benefit money while still alive. This can help give you a chance to tie up loose ends with payments and provide it to your chosen heirs.

Financial Control

As touched on previously, life insurance can make your financial life much more flexible. With life insurance, you do not have to worry about your family dealing with your finances if you happen to pass away. Instead, they will be given a lump sum of money, which your family can choose how to use. This can go towards anything your heirs decide on, such as your mortgage and other financial responsibilities. Having this freedom when using the insurance money can help tremendously, instead of only having the funds solely for the mortgage.

Managing Final Decisions

If you happen to pass away unexpectedly, this can shock your family. Making arrangements and paying final expenses can be very difficult during this time. However, with the insurance money they will receive, making final arrangements can help make this process more bearable. In addition, if you happen to have any expenses that you need to pay, they can have the necessary funds to make these payments. Having such financial stability can help your family through this challenging period.

Transferability

Having life insurance can also make your mortgage life easier. For example, if you have passed away and your family wants to change the mortgage or lender, the process can be more straightforward. You can switch your provider with more ease since you have control over your finances. If you have mortgage insurance, the company will have control over your funds, making it much more challenging to switch. Having the opportunity to quickly and effortlessly change your mortgage can assist your family with their finances and the stress of a mortgage.

Tax-Free Payouts

The great thing about receiving your life insurance money is that there is no tax. That means your family will receive all the money that you put in. In addition, the beneficiary will not be filing this as a tax return since it is for a life insurance payout. The benefit of this is that you are receiving more money than if you went with another kind of insurance, which typically takes off a bit for tax purposes.

Overall, life insurance is a great option, which provides much financial protection for you and your family. If you are wondering how you can sign up for life insurance, please contact us!

Sources

-Compare the Market (2020). What is Life Insurance, and is it Important? Retrieved from

https://www.comparethemarket.com.au/life-insurance/information/

-Marchand, Dawn (2021). Life Insurance Vs. Mortgage Insurance. The Canadian Bar Association. Retrieved from https://www.cba.org/For-The-Public/Buying-A-Home/Life-Insurance-vs-Mortgage-Insurance

-Tretina, Kat (2021). 5 Top Benefits of Life Insurance. Investopedia. Retrieved from 

https://www.investopedia.com/5-top-benefits-of-life-insurance-5105062