Life insurance helps you protect what matters most - your loved ones. Life insurance helps ensure their financial needs are met, even after you're gone. I am always thinking about life insurance. We consider things you wouldn’t want to, like
43,000 people who lost their lives in car accidents last year
Nearly 50 percent of families don’t have enough life insurance
1 in 4 households has no life insurance
If something happened to you, would your family be able to maintain the same standard of living they do today?
There are two basic types of life insurance: term and permanent. Deciding which type may be appropriate for you depends on how you want your life insurance to work for your family. An Agent can help you determine the type and amount of protection you may need.
To help figure out which is right for you, it may be useful to understand some of the basics of a life insurance policy:
The amount you pay in exchange for coverage To help figure out which is right for you, it may be useful to understand some of the basics of a life insurance policy:
The amount you pay in exchange for coverage
The amount of money paid to your beneficiaries upon your death
The amount available to the policyholder through surrenders, loans and withdrawals
Term Insurance Advantages
Permanent Insurance Advantages
Fills a temporary need for life insurance
protection in your life Policies offer lifetime protection and can
build tax-deferred cash value
Offers the least expensive insurance
protection Withdrawals and loans make it easy to
access your cash value to help supplement
retirement and emergencies
Most policies allow you to convert your
term policy into a permanent one You can cancel or surrender the policy at
any time and use the cash value however you wish Can be used as supplemental coverage to a permanent policy Offers a guaranteed premium that won't
increase Death benefits are generally income
tax free Death benefits are generally income tax free
Mix It Up
People often struggle with which type of policy best fits their lifestyle and budget. It may be tempting to go with term insurance because of its low cost, although some argue that despite initial higher premiums, permanent insurance could actually be cheaper and more stable in the long run. Bottom line - both offer advantages to explore. An appealing solution may be a mix of both, which may cover your short and long-term needs in a cost-effective way, potentially avoiding the high costs of buying all your permanent insurance at once.
Combine Them
Another approach may be to buy a policy that combines term and permanent life insurance. You lock in lifetime coverage, no matter your health conditions - guarding you from prohibitive costs in obtaining a new policy later, or denial of coverage. You may benefit from earned cash value to spend if you choose. The term insurance feature helps provide extra coverage when you need it most, and later you can convert all or part of the term portion of your policy without an additional medical exam.
Boost Your Term Policy with Riders
Many term life policies offer extra features called riders for an additional cost.
The amount of money paid to your beneficiaries Life Insurance
Who Needs Life Insurance?
No matter what stage of life you’re in, the time to start thinking about life insurance is now. Find yourself on the scenarios listed below.
Single
The need for life insurance may not seem as apparent if you don’t have a spouse or children to think about right now. But it’s never too soon to plan for the future, whether or not that involves marriage or children. Consider life insurance for retirement and estate planning. And if you’re young and healthy, now may be the best time to lock in a low rate.
Married or Getting Married
You are not in this alone anymore. Your spouse depends on you in lots of ways. Losing you to an accident or illness would be a huge emotional loss for them. Having the right amount of life insurance can help make sure it’s not a huge financial loss as well. Isn’t it important to help secure your family’s future?
Starting a Family
Congratulations! What an exciting time. It is estimated that it costs more than $165,000 to raise a child to the age of 18. Life insurance helps ensure that your family can retain their standard of living if you are not there. (USDA, Expenditures on Children by Families report, 2005)
Buying a Home
Buying a home is one of the biggest purchases you may ever make. Did you know that life insurance can be used to help pay off your mortgage and keep your family in their home should something happen to you?
A Stay at Home for Mom or Dad If you or your spouse stay-at-home, the household contributions you make- like cooking, cleaning, and day care- are valued up to $82,000. How will your family pay for these important services if the stay-at-home parent isn’t there?
Planning for College
A bachelor’s degree from a public university can cost $40,000. In the event something should happen to you, life insurance can help protect your children’s future, by ensuring that the educational funding is there if you aren’t. (NPR.org, the Rising Costs of College, May, 2006)
Looking Ahead to Retirement
You’ve worked your whole life and now it’s time to sit back and watch others work for awhile. Life insurance can be used to pass money on to your beneficiaries because generally the death benefit is income tax-free. Also, the cash value from your life insurance may be used to help finance your retirement in the event that other resources are insufficient.
Use this calculator to determine:
How much life insurance do I need?
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For life insurance details and definitions, click here.Term Life Insurance
Basic Protection
Term insurance is straightforward life insurance, with a basic cash payout. How does it work? Your beneficiaries receive a cash death benefit if you pass away within the 5, 10, 15, 20 or 30 year "term." If you live beyond the set term, your policy expires and your beneficiaries don't receive anything. Unlike permanent life insurance, your premiums are not invested to produce returns. That's why term insurance is usually less expensive.
Consider Term Insurance If: Because:
You're currently unable to pay the
premium of a permanent policy Term life insurance is generally less
expensive than permanent life insurance
You're looking for home mortgage
or other loan protection You can select a policy with decreasing
coverage to match your decreasing mortgage
or loan balances
You have young children You can buy protection for the length of time it
will take for them to be financially independent
You're looking for additional
protection to supplement another
life insurance policy Term life insurance offers affordable increments
of coverage for the length of time you choose
Permanent Life Insurance
Lifetime Protection
As the name implies, this form of insurance is permanent and doesn't expire. As long as premiums are current, you're protected for a lifetime. And like all life insurance, in the event of your death, permanent life insurance pays your beneficiaries a death benefit. In addition, the premiums you pay may generate tax-deferred cash value. You might choose to access this cash value to help with the costs of education, to help supplement retirement or for help with emergency needs. You may even be able to use your cash value toward lowering your premiums, or ending them altogether.
Consider Permanent Insurance If:
Because:
You’re looking for tax advantages
Earnings grow tax deferred
You may need access to your money
You can take out a loan, withdraw or surrender the policy
You're looking for a hedge
against inflation
Universal policies allow you to adjust the
death benefit to keep pace with the erosion of purchasing power
You're comfortable making
financial decisions Variable universal life allows you to choose
how your payments are invested Life Insurance
Boost Your Policy with Riders
Many life policies offer extra features called riders for an additional cost. You may be able to add riders to provide life insurance coverage for your spouse or children. Other riders pay your insurance premiums if you become disabled, or pay you part of your policy's death benefit early if you become terminally ill.
Every person has a different idea of what financial security means. If something should happen to you, how much money would your family need? You should consider:
Your current debt
Expenses your family can expect to pay after your death
Your family's future needs
There's a good possibility your life insurance needs may increase as your life progresses. You may want to consider adding additional coverage to your existing policy depending on your specific needs, desires and circumstances. Some insurance riders might include:
Additional Insured Rider
This rider provides additional term insurance for your spouse, and remains in force as long as coverage continues, or until your spouse reaches a certain age. The rider can also be taken out for another close family member, such as a parent, sibling, child or grandchild.
Children's Level Term Rider
This rider gives you insurance on children of eligible age. You can convert the policy into a greater amount of permanent coverage when the child reaches a certain age, regardless of their health at that time. This is a great way to insure your children now, and enable them to increase their insurance when they're adults.
Waiver of Charges
If you become disabled prior to a certain age, this will pay the minimum premiums required to keep the policy in force.
Accelerated Death Benefit
This rider provides partial benefits early if you should suffer a terminal illness that will result in death within a certain amount of time. This allows your family to benefit from your policy while you're still living.
Return of Premium (ROP)
A rider that allows you to receive a benefit equal to 100 percent of the premiums paid if your policy is still in force at the end of your guaranteed term period.
Life Insurance
Understanding Life Insurance
To help figure out which is right for you, it may be useful to understand some of the basics of a life insurance policy:
Premium – The amount you pay in exchange for coverage
Death Benefit – The amount of money paid to your beneficiaries upon your death
Cash Value – The amount available to the policyholder through surrenders, loans and withdrawals
Length of coverage – The amount of time you’re insured
Term Insurance
The most basic and least expensive type of life insurance. You buy coverage for a certain amount of time, such as 10, 15, 20 or 30 years. If you die before the term is over, your beneficiary gets the benefit stated in your policy. If you live beyond the term, the policy expires. Many policies also offer the option of extending your coverage, subject to certain restrictions and limitations.
Term Insurance Advantages
Fills a temporary need for life insurance protection in your life
Offers the least expensive insurance protection
Most policies allow you to convert your term policy into a permanent one
Can be used as supplemental coverage to a permanent policy
Death benefits are generally income tax free
Some term policies now offer a return of premium feature for an additional charge that return all of your paid premiums back at the end of the term period
Permanent Insurance
This type of policy never expires. As long as premiums are paid, it remains in force. Premiums are usually based on your age at the time of purchase and generally remain level. In addition to providing a death benefit, premiums are also invested to produce returns – adding cash value to your policy. You can even tap into this cash value by taking out a loan, withdrawal or surrendering your policy.
Permanent Insurance Advantages:
Policies offer lifetime protection and can build tax-deferred cash value
Withdrawals and loans make it easy to access your cash value to help supplement retirement and emergencies
You can cancel or surrender the policy at any time and use the cash value however you wish
Offers a guaranteed premium that won’t increase
Death benefits are generally income tax free
