LIFE INSURANCE

If others depend on you for financial support, part of your financial plan should include how you will provide for them in the event of your death. To help you decide which option is the best for you, we’ve covered the basics.

The Basics of Life Insurance

There are two basic types of life insurance: term life insurance and permanent life insurance. The type of life insurance policy that best suits you will depend on your unique needs and financial goals.

Option #1: Term Life Insurance

Just as its name implies, term life insurance covers you for a specific period of time, or term, that you choose (e.g., 10, 20 or 30 years). A lump-sum payment, or death benefit, may be paid to beneficiaries if the policyholder dies during the term. There is no cash value for the policy, and coverage ends when the term is over. Since it offers a death benefit but no cash value, term life insurance is an inexpensive way to protect your beneficiaries for a specified period of time.

Renewal term life insurance can be renewed at the end of the term for a limited number of successive terms. It can also be converted, or exchanged for a permanent insurance policy, without evidence of insurability down the road. It’s important to note that rates generally increase along with the insured’s age.

​Option #2: Permanent Life Insurance

Permanent life insurance can last a policyholder’s entire life as long as premiums are paid. Examples are whole life, universal life and variable life. These policies combine a death benefit with a long-term, tax-sheltered savings plan.

Whole life is the most basic type of permanent life insurance. It provides coverage that lasts a lifetime and also builds up a cash value that you can borrow against, withdraw or use to pay future premiums. When you enroll, you can lock in your premium rate for the duration of the policy.

A life insurance policy with a cash value is ideal for those who have a lifetime need for insurance protection, prefer stable premiums over the life of the policy, want a policy that allows them to build tax-deferred values, and value the high degree of coverage the policy affords. While rates for a whole life insurance policy remain stable over the life of the policy, premiums are initially more costly than for term insurance.

How Much Insurance Do I Need? To find the right amount of coverage, it’s important to weigh your dependents’ current lifestyle and spending needs against their future sources of income and assets. We can help you figure out how much your family will need to replace this lost income over this length of time should something happen to you. Contact us to learn more at 618-997-1311.