Firstly, life insurance is a contractual agreement between you and the insurance company, whereby the insurance company commits to making a lump sum financial payment to your loved ones or your creditors when you pass away.

Now you may be thinking, “A product that provides financially for my loved ones when I die sounds nice, but do I need life insurance if I don’t believe I’ll pass away anytime soon?”

The answer is yes, especially if your family depends on you financially, consider choosing a life insurance policy to protect them once you are gone.

Here are some scenarios to consider where your sudden death could potentially have a negative financial impact on your loved ones:

• Your funeral costs – In Bermuda, the average cost of a funeral is around $10,000 excluding the viewing and burial.
• Your spouse/partner relies on your earnings – If your partner depends on your paycheck to get by, they may struggle to cope.
• Your children/parents depend on your income – If you care for a child or a parent who is unable to provide for themselves, or if your child is enrolled in a college program, their future could be negatively impacted.
• Someone could inherit your debt – Unfortunately, your debts do not disappear when you are gone, and your loved ones could end up becoming financial responsible for any outstanding debt.
• Stamp Duty may be owed on your estate – If you have a sizeable estate, your heirs may be forced to pay a large fee to reclaim it.
• Your business may be in jeopardy – If you own a business, your partners/employees may be at risk of losing their livelihood as they essentially depend on you to survive.

Life insurance can provide a solution to address each of these situations, however one-size does not fit all. There are two different forms of coverage for you to choose from:
Term Life Insurance lasts for a defined number of years, after which you will need to either renew your existing plan at an increased rate or seek a new plan entirely.
Permanent (Whole) Life Insurance stays with you for your entire life if the coverage remains in force and up to date.

Each form of life insurance can be tailored to your specific need, with different levels of coverage and other additional benefits available.

If you simply want to protect your family when you pass away, Term Life Insurance is typically the more affordable option. You can purchase Term Life Insurance to cover yourself during critical years in your life, when your death would have the most significant impact on your loved ones financially.

On the other hand, Whole Life Insurance allows you to pass your wealth to the next generation.

Here are two instances that Whole Life Insurance differs from Term Life Insurance:
• Your coverage never expires if your premium payments are up to date.
• “Cash Value” grows within the policy in addition to the death benefit and can be a source of funds for your future needs.

With Whole Life Insurance, you pay a set amount – either for a defined period of time, or for the duration of the policy. Those premiums are then split in two:
• One part of your payment covers your Death Benefit.
• The other part of your payment is designed to grow your Cash Value over time.

Additionally, the cash value within the policy is available for withdrawal or can be taken in the form of a loan, allowing the policyholder to cover expenses such as a child’s university tuition or even home repairs etc.

It is important to note, some employers offer Group Life Insurance to their staff as part of their employment package. However, it is important to highlight that your Group Life coverage amount may not be sufficient to address the needs of all your dependents.

A personal life insurance plan could help solve this problem for you. By purchasing supplemental coverage, you can get the additional coverage you need to ensure your loved ones will be taken care of when you have passed away.

Regarding the cost of life insurance there is a direct correlation between the amount of coverage you need, versus your age and health, this is why it is essential to look at getting this protection sooner than later.

To find out more about how you and your family can benefit from life insurance, contact Carla Seely, Vice President of Pensions, Life and Investment at Freisenbruch-Meyer – via email at, or give her a call at 297-8686.

Front Street, Hamilton
(441) 297-8686