Life Insurance

Many people ask the common question, "Why do I need Life Insurance?" Well, Life insurance provides financial security for your family by providing a lump sum or annuitized payment of possible tax-free money after your death. This money, also called the death benefit, can help your family meet important financial needs by replacing the income you would have provided.

Life insurance can also help with expenses incurred at the time of death, such as any bills or estate taxes that the deceased may have incurred.

Some insurance companies even offer what is called "Accelerated Death Benefit”. An Accelerated Death Benefit is, if an insured becomes terminally ill, and his or her doctor gives him six months or less to live, the insurance company will give the insured up to fifty percent of the death benefit. The reason they do this is so that the insured can settle his/her affairs, without leaving the burden on the family.

Now that we know why one may need life insurance, let’s take a look at the various types of life insurance there is.

There are two categories of life insurance, Term Life and Permanent Life.

Term life insurance generally has lower premiums in the early years, but does not build up cash values you can use in the future and MOST importantly is only for a term. Permanent life insurance covers you for your entire life and builds cash value for use at a date.

Now that we know what types of life insurance there are, which is the right one for you

1. Term Life Insurance
   
   
2. Whole Life Insurance
   
   
3. Universal Life Insurance
   
   
4. How much coverage do I need?

Term Life Insurance:
covers you for a term of one or more years. Premiums will not increase during the term you select. Term Insurance pays a death benefit only if you die during that term. Term insurance generally provides the largest insurance protection for your premium dollar.

You can renew most term insurance policies for one or more terms even if your health has changed. Each time you renew the policy for a new term, premiums will be substantially higher. The policy remains in force for as long as premiums are current, provided there are no misrepresentations on the application or other defenses to coverage. Coverage terminates if you discontinue premium payments. People often purchase term life insurance to cover a mortgage or car loan. Term life insurance can include the option to convert to permanent life insurance in the future at your current rate classification. 

There are even companies that will return the premium you paid at the end of the term so long as no death benefit was paid.

Permanent Life Insurance covers the entire life of the insured person. Different types of permanent life insurance include whole life, universal life, and variable life. Similarly to Term Life as long as your premiums are paid, your beneficiaries will receive the death benefit when you die. However, you can have the cash value that has been built up in your policy pay the premium (loans against the policy may reduce the initial death benefit).

This type of insurance also combines death benefits with the opportunity to build savings tax-deferred. The insurance company on your behalf invests parts of your premium payments. This builds up a cash value, which you can use in several different ways. You can take out a loan against the cash value of your policy, use the cash as extra retirement income, or subsidize expenses like college tuition (loans against the policy may reduce the initial death benefit). You may also be able to cancel, or surrender, the policy and receive the cash value as a lump sum. With all permanent life insurance policies, the cash value is different from the policy's face amount. Cash value is the amount available if you surrender a policy, while face amount is the money paid by the insurance company at your death.

Premiums for permanent life insurance are higher than term life insurance because of the cash value. But like Term Life, the younger you are when you buy the policy, the lower your premiums will be.

To have an agent call you regarding Whole Life Insurance click here.
To fill out a form and receive a Whole Life Insurance quote via email click here.


Whole Life Insurance
provides permanent protection throughout a person's lifetime.  Regardless of when death occurs, the face amount of the policy will be paid, as long as the premium is paid. However, you can have the cash value that has been built up in your policy pay the premium. The amount of your premiums generally remains the same over the life of the policy and must be paid periodically for coverage to continue.

The insurance company invests part of your premium in its general portfolio to build the cash value of your policy. The policy also allows borrowing against the cash value of the policy at the specified interest rate of the contract.  Under current tax laws, you can access the cash values without a taxable event. .

To have an agent call you regarding Whole Life Insurance click here.
To fill out a form and receive a Whole Life Insurance quote via email click here.


Universal Life (UL) Insurance
like Whole Life Insurance provides permanent protection throughout a person's lifetime.  Regardless of when death occurs, the face amount of the policy will be paid, as long as the premium is paid. Unlike Whole Life, premium can go up or down reflective of market conditions and mortality rates. And the premium can be paid by the cash value that has been built up in your policy pay the premium.

This type of insurance usually guarantees a minimum interest rate on the balance that is invested. Universal life (UL) differs from Whole Life Insurance in that Universal Life is much more flexible than whole life, In that it:

Variable Universal Life Insurance is a type of whole life insurance that incorporates investing. You can invest your premiums in the stock, bond, and money market funds you choose from the insurance company's portfolio. While the cash value of variable life policies is not guaranteed, you have control over how your money is invested. The cash value and death benefit of your policy is determined by how well your investments are doing. This type of life insurance usually has fixed premiums.

To have an agent call you regarding Whole Life Insurance click here.
To fill out a form and receive a Whole Life Insurance quote via email click here.

Q. How much coverage do I need?

A. That's our most frequently asked question! Here are some things to ask yourself:

How much of the family income do I provide? If I were to die early, how would my survivors, especially my children, get by? Does anyone else depend upon me financially, such as a parent, grandparent, brother, or sister?

Do I have children for whom I'd like to set aside money to finish their education in the event of my death?

How will my family pay final expenses and repay debts after my death? Do I have family members or organizations to which I would like to leave money? Will there be estate taxes to pay after my death?

How will inflation affect future needs?

As you figure out what you have to meet these needs, count the life insurance you have now, including any group insurance where you work or veteran's insurance. Don't forget Social Security and pension plan survivor's benefits. Add other assets you have: savings, investments, real estate, and personal property. Which assets would your family sell or cash in to pay expenses after your death?

Here are two ways you might determine how much coverage you need.

1. Capital Needs Calculation

Determine how much annual income your family would need in the event of your death. Determine an interest rate you feel investments would yield. Divide the rate into the annual income. This will tell you how much death benefit to purchase. For example:

If you believe your family would need an annual income of $50,000 and if you believe your family could achieve a return of 8% (0.08) on invested insurance proceeds, then you should purchase $50,000 / 0.08 (i.e. $625,000) of life insurance.

2. Rule of Thumb Pick a death benefit of three to seven times annual earnings depending upon your overall financial conditions. Consider debts, mortgages, anticipated college expenses, dependents, et cetera.