Term Life Insurance

The Real Cost of Being Uninsured.

September 15, 2015 by Frank West

Life insurance, disability insurance, long-term care insurance—if you are like most people, when your insurance agent starts talking about coverage you ought to consider, all you can think about is what it’s going to cost you. And even though it may seem like the economy is getting better, many people are still struggling with the impact the recession has had on their budget and what expenses they can put off until tomorrow.

According to the 2013 Insurance Barometer Study, conducted by LIFE and LIMRA the majority of consumers are concerned about having enough money for a comfortable retirement, with paying for long-term care and medical expenses next in line in terms of worries—all legitimate issues.

At the same time, it can be challenging to find the money to insure against a possible future event such as a major illness or debilitating accident when you’re facing real expenses or dealing with an insufficient income right now. In situations like that, it can be tempting to metaphorically cross your fingers and hope for the best, putting insurance on the “deal with it later” list. But before you choose that option, you need to know the real cost of being uninsured.

Life Insurance
Imagine that you were to die today. Would your family be able to pay your final expenses and continue to meet ongoing living expenses without your income? Or, if you are a stay-at-home parent, would your partner be able to afford to pay someone to perform all the duties and responsibilities you handled? What about long-term plans—will your children be able to attend college or your spouse retire as planned? With adequate life insurance, your family will be provided for when you are no longer there.

And, depending on the type of policy you choose and the option added to the plan, your insurance can be increasing in value or even, in the case of a terminal illness, provide funds to pay bills even before you die, relieving you and your family of at least one major worry.

Worried about the cost of insurance? While the vast majority of underinsured middle-income consumers include cost as one of the reasons for not purchasing life insurance, even when they believe they need it, the reality is that most people grossly overestimate how much a policy premium would be. For example, a 20-year, $250,000 level-term life policy for a healthy 30-year-old has an actual yearly premium cost of $150. Those surveyed estimated the same coverage at $350 to $500.

Disability Insurance
You don’t need disability insurance, you think. After all, isn’t that what Worker’s Compensation is for? Yes — and no. If the injury occurs on the job, then Worker’s Comp does come into play. However, only 5% of disability claims are work-related—and, according to the Council for Disability Awareness, approximately 90% of disabilities are caused by illnesses rather than accidents.

For example, if you are diagnosed with cancer or sustain major injuries in an auto accident and are unable to work, what will be the source of your income? How will you cover your living expenses and the additional cost of medical care? In this scenario, half of working Americans couldn’t make it one month before experiencing financial difficulties and nearly one fourth wouldn’t make it a week, according to a LIFE study. With disability insurance, however, you would have a source of replacement income to cover costs until you’re able to return to work. Fortunately, there are several options for getting disability insurance coverage.

Long-Term Care Insurance
We’d like to think that we will be able to live life on our own terms until it’s time to go, but the reality is that two-thirds of people will actually need some type of long-term care, either in their homes or at a facility. Where will the money come from if you fall into that majority? From Medicare or your existing health insurance? Not likely, since health insurance only pays for doctor and hospital bills, Medicare covers only short-term skilled nursing home care, and Medicaid only comes into play if your assets are very limited.
Will your savings be able to cover the expense? A home health aide three days a week will cost more than $20,000 a year and full-time nursing home care can be over $78,000 annually.

Maybe you think long-term care is something only the elderly have to worry about. But anyone at any age can suffer from an accident or debilitating injury that requires long-term care. As a matter of fact, 40 percent of patients receiving long-term care are under age 65.

For a comprehensive look at what long-term care insurance contact your agent who specializes in long-term care insurance.

The Bottom Line
There are a lot of factors to weigh when purchasing insurance, but be certain to have all the facts before making a decision. As you can see, both buying insurance and not buying insurance comes at a price. Be sure you know what the cost is—short-term and long-term.

Mortgage Protection.

August 17, 2015 by Frank West

Filed Under: Mortgage Life Protection., Term Life Insurance Tagged With: insurance broker, Term Life Insurance

Family Term Life Insurance.

August 17, 2015 by Frank West

&lt;iframe
src='https://www.webprez.com/embed/player/7540/34?height=400&width=600'
height='400' width='600' frameborder='0' scrolling='no'/iframe&gt;

Filed Under: San Diego Life Insurance, Term Life Insurance Tagged With: Term Life Insurance

Review Life Insurance Needs and Coverage Annually.

August 11, 2015 by Frank West

Review Life Insurance Needs and Coverage Annually

Some things need regular maintenance for them to function for you. You need to check your car’s fluids and tire pressure occasionally, and do some preventative maintenance. Same with your lawn mower. Children need occasional doctor visits and immunizations. Life insurance is no different. To ensure that your life insurance is up to date and covers your family’s evolving needs, it’s a good idea to schedule a once-per year life insurance review, in person, with a qualified, licensed insurance professional.

Is your Coverage Current?

There are a number of things that can occur that can cause a need to make a change in your coverage:

Did you get married?

Did you have a child?

Did you adopt a child?

Did you get divorced?

Did a spouse die?

Did your debt level change? For example, did you purchase a house on a mortgage? Did you pay one off?

Have interest rates changed since you last shopped for insurance?

Have you retired? Does your family rely more on savings than on your income from work? It may be time to consider a tax-free exchange for an annuity designed to generate income and preserve savings.

Has your income changed?

Are you now a partner in a company?

Do you have a key employee?

Did you inherit a substantial amount money or property?

Will your parents rely on you for financial assistance or support?

Have you lost weight?

Have you quit smoking?

Do I have a sound life insurance strategy in place?

Any of these common life changes can precipitate the need for a significant change in life insurance coverage. But even if you haven’t undergone one of these life-changing events, it’s still a good idea to have a good heart to heart with your insurance agent on an annual basis. Here are some reasons to start with:

Options may expire. If you’ve had a policy for a while, you may have some options to purchase additional coverage expire soon. It may be time to sit down and review your options and see if you want or need the additional coverage. This is especially true if your health has declined, or you’ve gained weight. You may not have another chance to purchase life insurance at your original rating.

You may want to convert term life insurance to a permanent insurance policy. Term insurance provides the most face amount per dollar of monthly premium now – but it is very expensive over the course of a lifetime. Your agent can review your options and help you select the best strategy for you.

There may be new solutions and products available that may suit your needs that weren’t available a year ago. Life insurance companies are constantly evolving, looking to uncover customers’ needs and provide solutions to enhance their financial security. For example, your company may now offer a useful new rider or other benefit.

Regular reviews are also important to prevent unwanted lapsing of insurance policies. These are particularly important if you own a universal life policy and you have been paying premium out of cash value. Even if your existing insurance policy is with another company, you can still review it with us. If you qualify, an exchange may be warranted.

We’d like to invite you to schedule a no-obligation personal life insurance needs review. The purpose is to look at your current coverage and how well it dovetails with your personal financial needs, goals and risks. From there, we will determine if your current life insurance strategy still meets your needs, or if a change is warranted.

If you have a permanent policy, with cash value – whether it’s a whole life, universal life, or equity-indexed universal life policy, we can also explore some strategies that may be available to you to make use of the substantial living benefits of these policies

Filed Under: San Diego Life Insurance, Term Life Insurance Tagged With: Term Life Insurance

5 Life Insurance Types to Know.

July 27, 2015 by Frank West

Whether you need life insurance or not is generally a relatively simple decision to make. But there are many life insurance types, and deciding which one will serve you best can be more complicated. Here’s a handy introduction to the five main types of life insurance: term, whole, universal, variable, and variable universal.

Why life insurance?
Let’s start, though, with a quick review of why you might need life insurance in the first place. Obviously, you might need it if you have young kids and a spouse and want to provide for them in case you die and aren’t around to do so yourself. But life insurance is also valuable if you have any other people who depend on you financially — or might in the future — such as parents or nieces or nephews or a disabled loved one. For that reason, single or childless people shouldn’t quickly assume that they don’t need life insurance.

You might also get life insurance that can pay off a mortgage should you die, or that can keep your business running for a while once you’re gone or that can pay any estate taxes or funeral expenses that materialize upon your death. (Of course, for some of these reasons, you might just accumulate money in a separate fund, bypassing insurance.)

It’s worth noting that come tax time, the payout (“death benefit”) is received tax-free by the beneficiary, as death benefits in general are, for all types of life insurance. An exception would be if you owned a life insurance policy on yourself, with proceeds becoming part of your estate. If so, then they might be subject to an estate tax.

With that out of the way, it’s time to jump into the types of insurance. Note that each of them is sometimes referred to by a different name, so focus on the description of each. Whole life insurance, for example, may be called ordinary life insurance, and universal life insurance might be called adjustable life insurance.

Term life insurance
Term life policies are often chosen by insurance consumers because they can make the most sense. As its name suggests, a term life insurance policy remains in force for a specified term — often 10 to 30 years. Thus, it won’t necessarily cover your entire life — but by age 60 or 80, you may not really need it anymore, with your children grown and your retirement nest egg established.

Term life insurance also tends to be simpler and significantly less expensive than other life insurance types. In part, that’s because it offers a death benefit should you die during the policy’s lifetime, and little else. Term life policies generally offer the most insurance coverage for your buck, because the policies aren’t offering you many other features.

Premiums for term life policies are often fixed at first, for a certain period, and then they start rising. There are many variations of term policies, though. For example, you might be able to opt for fixed premiums, in exchange for a death benefit that decreases as you age. Many policies let you renew for additional years, usually at a higher cost, and some let you convert the policy into a whole life insurance policy.

Considering that the Society of Actuaries has estimated that 39% of whole-life policies are terminated within the first 10 years, getting a term policy is an even more appealing option.

Whole life insurance
Another widely used kind of life insurance is the whole life policy. It’s designed to last for your entire life and usually features a lot of certainty: You’ll have fixed premiums and a specified death benefit. And along with that, you’ll accumulate a cash value account that serves as an “investment” component to the policy. The longer the policy is in force, the more money accumulates in the cash account — on a tax-deferred basis and according to a schedule. If you stop paying premiums before you die (or before age 95 or 100, when many policies let you stop paying), you’ll lose out on the death benefit, but you can claim the cash value.

In addition, many whole life policies will pay you dividends that will effectively reduce the cost of your premiums. Some policies will let you use the cash that has accumulated in your account to pay your premiums, too.

The next three life insurance types are variations of whole life insurance.

Universal life insurance
Universal life insurance also involves a cash-value account growing over time, but it does so in a different way, based on prevailing interest rates (and typically guaranteed to not fall below a particular point). It’s also very flexible, permitting the policy holder to adjust, over time, the premiums, cash accumulation, or term of the policy. If you find you need or want more coverage later in life, for example, you can get it. Or if you want to pay less for less coverage, you can opt for that, too.

Variable life insurance
With variable life insurance, the policy has two parts — one is a general account intended to cover the insurer’s obligations and the other an investment account, where the policy holder gets more choices regarding how money in the account is invested — for example, perhaps being able to invest through one or more stock mutual funds, bond mutual funds, or money market funds, or a combination of them. This increases the upside of the account, but also adds more variability to the cash account and also the death benefit.

Variable universal life insurance
Variable universal life insurance is a combination of universal life and variable life, permitting adjustments in the premiums, death benefit, and investment options. The death benefit may fluctuate in value depending on the performance of the underlying investments — though insurers will typically have a floor below which it can’t fall. These policy holders bear more risk, in return for a chance at higher returns.

It’s worth noting that with the insurance policies that have investment components, you might consider passing that component up and simply investing your own money in funds or other investments you choose yourself. That can be a less expensive way to invest, giving you ultimate control and flexibility, and it can permit the dollars you do allocate to insurance to buy you more insurance.

Whichever of the life insurance types that you select, be sure to choose a strong, highly rated insurer. If you’re quoted a great price by a company you’ve never heard of that ends up going out of business in a decade, you’ll be wishing you’d gone with a top-rated outfit instead.

Filed Under: Life Insurance, Term Life Insurance, Universal Life Tagged With: Term Life Insurance

Should I Skip Insurance to Save Money?

July 8, 2015 by Frank West

When money is tight, you may be looking for easy ways to save money. One item that can be especially frustrating is your insurance bill each month. You send the money in, but then you rarely if ever use it. You may be tempted to try to go without insurance because it is something that you rarely use. However, insurance is there to protect you from the overwhelming catastrophes.

Should I Cancel Insurance Completely?

The simple answer is no. There are three basic types of insurances you need to have no matter what. You need to have health insurance, car insurance, and home or renter’s insurance. Law requires car insurance and you can choose to get just the bare minimum requirements. If you have a car loan make sure you have enough coverage to pay off the loan.

What’s a Life Insurance Premium?

If you have a mortgage, the company will require you to carry the insurance. Health insurance is also required under the Affordable Care Act, and can protect your from financial disaster. If you have any dependents you really should have life insurance, as well.

What If I Never Use It?

If you never use health insurance or make a claim on your car or home owner’s insurance, that is great. However, it does feel like you may be wasting your money. The simple fact is that you do not know when you will need the insurance. No one wakes up and plans to get an appendectomy or to get in a car accident. No one wakes up and thinks it would be great to be robbed today. These things happen everyday to all over the world, and your insurance is your protection so these events are easier to mange. Insurance makes it easier to move forward.

How Can I Save?

One of the ways you can save money is by increasing your deductible. If you rarely use your insurance, you can set aside money each month to cover your deductible.

With a high deductible health insurance policy, you will pay out of pocket until you reach your deductible. However, you will be covered when you become seriously ill, and you will better be able to manage your bills. You can also lower you car and home insurance policy premiums by increasing your deductible. You need to be sure that you can afford to pay the difference. Another way you can save is by shopping for a new policy every few years. Most insurance companies will charge new customers less for their premiums. You can also take advantage of discounts through your job and alumni association to help reduce costs.

Is There Any Insurance I Can Do Without?

There are some options that you may not need right now. One easy example is cancer insurance, which usually offers a one time lump payment when you are diagnosed with cancer. Unless you have an extremely high chance of getting cancer due to family history, you can likely skip this option. When you are in your twenties, you do not need to purchase long-term care insurance, since you will likely not need it until you are a bit older. Finally, you may not need an umbrella policy when you are in your twenties, because you do not have a large number of assets that you need to protect.

Remember that insurance is designed to protect you. The protection it offers is worth the amount that you are paying in premiums each month. It only takes one accident or unexpected event to put your finances in a tailspin. While it may seem like you are throwing money away, you will find at some point just how much your insurance gives you, including peace of mind. Take the time to review your policies each year to make sure that you have the right amount of coverage for your current needs.

Filed Under: Health Insurance, insurance, Life Insurance Tagged With: Health Insurance Self Employed, Term Life Insurance

7 things you need to know about term life insurance.

June 29, 2015 by Frank West

The two principal characteristics of term insurance are: the insured must die for any benefits to be paid and, by definition, the contract expires at the end of the term. Stated more specifically, a term life insurance policy promises to pay a death benefit to a beneficiary only if the insured dies during a specified term.

The contract makes no promise to pay anything if the insured lives beyond the specified term. Generally, no cash values are payable under a term life insurance contract. If the insured survives the specified term, the contract expires and provides no payment of any kind to the policyowner.

1) When should term life be purchased?

In general, some type of life insurance is indicated when a person needs or wants to provide an immediate estate upon his or her death. This need or desire typically stems from one or more of the following reasons:

A. Providing income for dependent family members until they become self-supporting after the head of household dies.

B. Liquidating consumer or business debts, or to create a fund, enabling the surviving family members to do the same when the head of household dies.

C. Providing large amounts of cash at death for children’s college expenses or other capital needs.

D. Providing cash for federal estate and state inheritance taxes, funeral expenses, and administration costs.

E. Providing funds for the continuation of a business through a buy-sell agreement.

F. Indemnifying a business for the loss of a key employee.

G. Helping recruit, retain, or retire one or more key employees through a salary continuation plan, and finance the company’s obligations to the dependents of a deceased key employee under that plan.

H. Funding bequests of capital to children, grandchildren, or others without the erosion often caused by probate costs, inheritance taxes, income taxes, federal estate taxes, transfer fees, or the generation-skipping tax.

I. Funding charitable bequests.

J. Preserving confidentiality of financial affairs. Life insurance proceeds payable to someone other than the deceased’s estate are not part of the probate estate and are not a matter of public record. It is not unusual for a beneficiary to be a lover, illegitimate child, faithful domestic servant, or have some other type of relationship with the insured that he or she may not want to be publicly acknowledged.

K. Assuring nearly instant access to cash for surviving dependents. Life insurance proceeds are generally paid to beneficiaries within days of the claim. There is no delay, as might be the case with other types of assets, because of the intervention of state or other governmental bodies due to settlement of tax issues, or because of claims by the decedent’s creditors.

L. Directing family assets to family members in a way that minimizes state, local, and federal taxes.

Generally, term insurance is not the most effective type of life insurance for all of these death benefit needs. However, term insurance may serve the insured’s needs in many circumstances. Because term insurance is not just one product, but rather many variations on a general theme different types of term insurance are indicated for different types of needs.

Keep in mind, term insurance, more than any other type of insurance, is pure death protection with little or no ancillary or lifetime benefits. Therefore, the two overriding considerations in the use of term insurance, regardless of the specific application, are:

Will death protection alone meet the need?
Will the coverage last as long as the need?

In short, with term — as with any other decision about the appropriate type of coverage — the product must match the problem.

Filed Under: Life Insurance Tagged With: Term Life Insurance

7 Myths About Life Insurance.

May 20, 2015 by Frank West

Life insurance is kind of like the Rodney Dangerfield of financial planning. As one of most people’s least favorite financial topics, it gets no respect. Yet, it’s something that almost everyone needs and not having it when you need it can be devastating to your family’s well being. Here are some of the most common and dangerous myths about this often misunderstood product:

1) Your employer-provided life insurance is all you need.

Your employer may provide you with life insurance equal to 1-2 times your annual salary and you may even be able to purchase up to 4-6 times your salary. But there are several problems with that. First, your “salary” doesn’t typically include commissions, bonuses, and second incomes. Second, to replace your income for dependents, you generally need at least 5-8 times your income and some experts even recommend 10-12 times. (You may want to use a calculator like this to determine your specific needs.)

Even if you do have enough insurance through your job, you may lose it when you leave. You may be able to convert your optional insurance to an individual policy or purchase one on your own but either way, it may be much more expensive than purchasing a policy today, especially if your health deteriorates.

Finally, you may actually be able to get a better deal on your own, especially if you’re young and/or in above average health. Even if your employer’s policy is initially cheaper, the cost may go up each year and you may not be able to take it with you when you leave, You can purchase an individual policy that locks in your rate for a period of time or allows you to build cash value if you want to keep the policy your whole life. Only include your employer’s coverage in covering your needs if you can take it with you at affordable rates. Otherwise, consider it a bonus.

2) Only the breadwinner needs life insurance.

“Imagine if something were to happen to the stay-at-home spouse in your family. The breadwinner may need to hire someone to clean and take care of the kids and that can cost a lot of money. Unless your family would have that extra income to spare, you may need life insurance on both spouses,” advises Marvin Feldman, President and CEO of life insurance non-profit organization, Life Happens. Insurance on the stay-at-home spouse also gives the working parent the opportunity to take time off work and help the family adjust to their loss.

3) Life insurance is really expensive.

A recent study conducted by Life Happens and LIMRA, found that 25% of Americans said they need more life insurance but only 10% planned to purchase it within the next year. The main reason given was cost, with 63% saying that it’s too expensive. However, 80% of them overestimated the cost. 25% thought that a $250k 20-year level term policy for a healthy 30-yr old would cost $1k a year or more when it actually would cost about $150.

4) My health disqualifies me from life insurance.

There are a lot of companies that cover a range of health conditions and some even specialize in high-risk cases. You can also purchase a policy that is not medically underwritten at all. Just be aware that they tend to be more expensive and have lower coverage limits.

5) Everyone should buy term and invest the difference.

While this generally makes sense for most people, a permanent policy can be a better deal if you need life insurance for your entire life. Some examples would be to provide for a special needs child or to cover estate taxes. For a small percentage of the population, the cash value can also be a good investment if you need life insurance, are in a high tax bracket and have maxed out all your other tax-advantaged options.

6) You get a better deal purchasing life insurance online.

“The Internet can be a great place to research life insurance and find an agent but you actually pay the same price whether you purchase a policy online or through a human being,” says Feldman. “What you don’t get online is the personal service that can help you figure out how much you need, which company is likely to give you the best price based on your health situation, and what the terms on the application mean. A web site may not realize that you need coverage for your whole life due to a child with special needs or that your health won’t qualify you for the rates offered by the lowest price company. Most importantly, a commission-motivated agent can help motivate you to actually get the policy as it’s something very easy to procrastinate.”

7) You’re too young to worry about life insurance.

Life insurance actually makes the most sense when you’re young since the premiums are less expensive and you have fewer assets to pass on to heirs. The longer you wait, the more expensive it will tend to be and the more likely you are to develop a medical condition that makes it much more expensive. Of course, the biggest problem with procrastinating life insurance is that by the time you need it, it’s too late to get it.

Every person’s situation is unique. Some people don’t even need insurance at all. Whatever decision you make when it comes to life insurance, just be sure it’s an informed one. After all, if something does happen to you, you don’t get to come back and relive the day like Bill Murray did in Groundhog Day.

Filed Under: Life Insurance Tagged With: Term Life Insurance, Universal Life

How Much Life Insurance Do I Need?

April 22, 2015 by Frank West

Figuring out your life insurance needs sounds trickier than it actually is. The important thing is first determine whether you need life insurance, which kind is best for you and carefully calculate how much you need.

All we have to do is be clear about what your situation is, what risk to mitigate and voila, you have your answer.

First question: Do you need life insurance at all? If you have dependents to protect and don’t have enough savings, you definitely need insurance.

Second question: Which kind of insurance should you get? If you want to protect your family against the destruction of your business or estate taxes after your death, whole life or universal life insurance has to be considered. But if your main concern is to protect your family against a loss of your income, term insurance is the way to go.

Finally, how much insurance do you need? This question is also pretty straightforward. It takes a few steps, but it’s not rocket science. Let’s go through it:

1. How much debt do you have other than your mortgage? If you have any other debt, you are spending more than you earn. Do you add to your debt each month? Do you pay it down each month? If you have debt, you have to buy more life insurance to pay it off.

2. How much do you spend each month? The most accurate way to determine your monthly needs is to use a personal budget software package, but you can also use your bank statements to estimate your spending.

You can’t protect your family if you don’t know how much you need every month. Don’t just guess. You might think that $500,000 in term coverage is sufficient. After all, it’s a lot of money. But give it careful thought. You may find that this is not enough.

If you die and your family gets the $500,000, what can they do with it? They might invest it using an income diversity strategy and maybe earn 5%. That amounts to just $25,000, of yearly investment income. So, if you earn $25,000 in salary, a $500,000 term policy is plenty. But if your family depends on more than $25,000 each year, you need more coverage.

3. How much do you save each month? If you put away money every month and live within your means, keep it up. In fact, you probably don’t need to replace all of your income, so you need less term life insurance.

4. What are your longer-term saving goals? How much money do you need to retire and pay for your immediate future? Are you saving enough to fund your future automobile purchase, retirement and education for the kids?

If you have funds set up for nonrecurring but expected outlays, fine. Otherwise, you need more coverage.

5. How much income do your survivors need if you aren’t around? This is the only thing that really matters when it comes to determining how much life insurance you need. But to answer this you have to first add up your answers for the above questions.

Let’s say you know you spend $6,000 each month to pay all your bills including taxes. You calculate this using a personal budgeting software program so you know you are on target.

Let’s also assume that this $6,000 pays for everything including future college education, automobile purchases and retirement. Of the $6,000, you earn $3,500 and your husband earns $2,500.

You run a financial plan and figure that by age 65, your maximum social security benefit and income from your investments will replace your earned income. That’s when you retire. (Without a financial plan it’s really tough to know how much insurance you need.)

After you do this exercise, you know that you need to replace your income until you reach 65. That’s $3,500 per month for you and $2,500 for your husband.

Your monthly income is equivalent to $42,000 a year. You need enough term insurance so that if you pass away, you could invest the proceeds and earn $42,000 after tax. How do you calculate that?

Filed Under: Life Insurance Tagged With: Term Life Insurance

Why Do I Need Life Insurance?

December 15, 2012 by Frank West

Why do I need life insurance?

Life insurance is about how you want to live your life right now and many years from now. It’s also about how your loved ones will live their lives when you’re gone. AMAC offers life insurance products through various top-rated reputable life insurance carriers to help protect what is important to you – whether it is to protect the assets you’ve worked so hard to attain, or to ease your family’s burden after you are gone. Life insurance helps to provide peace of mind for you and your family.

To Replace Lost Income

Most people buy life insurance as a means to replace income lost if something happens to them. Providing money for survivors is important. Life insurance is the most cost effective way to do it.

To Pay Off Debt

Debt can be very burdensome to your family, especially without your income available to help repay it. Life insurance can be used to pay off debt and help create more financial security for your family.

To Pay Final Expenses and Offer an Emergency Fund

Final expenses can be very significant, especially if there are large medical bills, funeral or legal expenses to pay. An emergency fund can cover unexpected bills such as emergency repairs to your home or car. Life insurance provides cash that can be used to help your family cope in a time of distress.

To Help Pay for Your Children’s Education

Educating children can be expensive and often requires a long-term strategy. Many people plan to contribute funds each year until they have enough money saved to pay all or some of their children’s education costs. Unfortunately if something unexpectedly happens to you, there may not be enough time to set aside adequate funds for education. Life insurance can help by creating a lump-sum of cash that you can count on to help pay part of your children’s education costs.

Types of Life Insurance

Term Life: Protects your family with a death benefit for a specific term or span of years if scheduled premiums are paid. If you die during the policy term, your beneficiary is paid the coverage amount subject to your policy terms. Since it provides “pure” insurance without any cash value accumulation, term life insurance coverage is generally less expensive initially than permanent coverage.

Whole Life: Considered “permanent insurance”, coverage is intended to remain in force during the Insured’s entire lifetime, providing premiums are paid as specified in the policy. A whole life insurance policy can build cash value on a tax-deferred basis. Both the premiums to pay and the cash values that result are predetermined and found in the policy contract. The cash value is an amount of money available to the policy owner for policy loans or as the surrender value if the policy is canceled and returned to the company.

Universal Life: Considered “permanent insurance”, UL policies offer a valuable death benefit and provide the opportunity to build cash values that you can borrow, or withdraw. If your Universal Life (UL) policy is in force at the time of the insured’s death, policy proceeds will be paid in accordance with the terms of the policy to the beneficiary. With certain limits, you can choose the premium you wish to pay and this determines how the policy values develop. UL is also an “interest sensitive” product, which means that the interest rates credited to policy values will change over time.

Filed Under: Life Insurance Tagged With: Term Life Insurance, Universal Life

1) When should term life be purchased?

Quick Links