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| LIFE INSURANCE |
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Along with a savings and investment strategy, life insurance is the critical cornerstone to a sound financial plan. |
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If you are like most people you do not want to think about it, but your death can be devastating on your family's finances. At the very least, there will be funeral and burial costs. There may also be estate taxes and outstanding debts and bills to pay. If your family relies in any way on your income they will be forced to scramble to help pay for the most basic needs and ongoing financial obligations.
Life insurance could spare your family the hardship of these worries and financial loss. Aside from peace of mind proper life insurance will provide economic assistance to your family so they can pay off any outstanding loans, pay college tuition, and any other ongoing financial obligations or future plans you may have had for your family. Emotional loss in the case of death is unavoidable but with Life insurance you will enable your family to maintain their current lifestyle and be free of financial hardship.
Insurance companies market themselves aggressively to get your business and choosing one insurance company out of over 1400 can be a difficult task. Dealing with a knowledgeable agent who has access to many companies can help make this difficult decision an easier one for you and your family. At FamilyInsurance.Org we have no allegiance to any one insurance company. We want to present you with options. More options make sure you are getting the best companies, the best products, and the best premiums available. |
| THE TWO MAIN TYPES OF LIFE INSURANCE |
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There are many types of life insurance policies but most fall into one of two categories: Term or Permanent. Depending on your objectives and budget either one might make more sense for you. Read on to discover the differences.
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| TERM LIFE INSURANCE |
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Term Insurance is the simplest and least expensive form of life insurance. It's aptly named term insurance because coverage runs for a certain 'term'. Common policies are 10, 15, 20, and 30 year level terms. These policies provide a death benefit for your family, but do not offer cash savings.
Term insurance is often compared to renting a home. It is a short-term solution. Monthly costs are usually lower, but policies do not build equity and eventually coverage can run out or become extremely expensive during later years if you wish to renew the policy after the initial term. It is designed to provide coverage for that term you selected. Policies are usually convertible to permanent types of plans and indeed many people take advantage of the low cost of term insurance until permanent protection becomes more affordable for the family budget.
Many people fail to accurately assess their need to have life insurance coverage in place years from today. For example, many people are comfortable buying a term plan for 20 years today but then find when the 20 years has passed they still have a great insurance need with and expired life insurance policy. Their only choice is to return to the insurance marketplace again and begin to shop. This time, at a much higher age. Sadly, often times by this point, their health has deteriorated to a point where coverage is very expensive or not available at all.
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Here are some of the Options and Highlights of Term Life Insurance.
Keep in mind that options below are subject to your State's availability.
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Provides relatively inexpensive coverage for a set period of time. |
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Level premiums available (some plans however, can increase each year in cost). |
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Available in 10, 15, 20, and 30 year Level Terms. |
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Disability Coverage Rider — Can pay out a disability benefit if you are disabled and unable to work. |
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Waiver of Premium Rider — Pays your policy premiums if disabled. |
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Return of Premium — Can return 100% of premiums paid tax free at the end of policy term. |
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| PERMANENT LIFE INSURANCE |
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Permanent insurance includes products such as universal life, variable universal life and whole life. These policies provide long term protection and include both a death benefit and, in many cases, cash savings. Premiums are higher on these policies because of the savings mechanism in the policy and permanent nature of the coverage. Permanent insurance is suited for longer-range financial planning and goals.
Purchasing permanent insurance is often compared to buying a home instead of renting. You are taking care of long-term housing needs with a long-term solution. While your monthly costs may be higher than if you were renting your payments will build equity over time. If you purchase permanent insurance, your premiums will pay a death benefit and may also build cash value that can be accessed in the future to borrow, spend, or pass on to your heirs.
3 TYPES OF PERMANENT INSURANCE
The 3 main types of Permanent insurance includes, Whole Life Insurance, Universal Life Insurance and Variable Universal Life Insurance. All 3 can provide protection for your entire lifetime, or in certain instances up to a specific age, at which point the insurer pays the policy owner the cash value. Permanent life insurance policies can build a cash value. This is money that you can borrow against and in some instances, withdraw to help meet future goals, such as paying for a child's college education.
Permanent life insurance policies enjoy very favorable tax treatment. Cash value generally grows on an income-tax deferred basis; which means that you pay no taxes on any earnings in the policy so long as the policy remains in force. More importantly withdrawals or loans against the cash value are, in many cases, tax-free.
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WHO SHOULD CONSIDER PERMANENT LIFE INSURANCE?
People who…
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May need life insurance for a long term. |
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May be interested in accumulating policy cash value to provide funds for education, retirement or other future goals. |
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Want to take advantage of the tax-favored treatment of cash value life insurance policies. |
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Those who want to take advantage of the LIVING BENEFITS now available on some life insurance policies. |
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LIVING BENEFITS — "Life Insurance you don't have to die to use!"
We are proud to offer revolutionary Life Insurance products from top rated companies that you don't have to die to be able to use. With most life insurance, your family can only receive a benefit if you were to die. But some of today's products have incredibly powerful features that enable you to have benefits for disability, critical illness, nursing home expenses and chronic illnesses and more. In past years you would need to purchase separate policies at much higher total costs for this type of coverage. But today the opportunity exists to put comprehensive insurance coverage within one policy. Here are some of the benefits that are now available through our carriers that offer these valuable "Living Benefits."
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Disability Coverage Rider |
Can pay out a disability benefit if you are disabled and unable to work. |
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Waiver of Premium Rider |
Pays your policy premiums if disabled. |
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Critical Illness Coverage
Rider |
Allows access to the death benefit if you are diagnosed with a critical illness such as a stroke, heart attack, or certain types of cancer. |
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Chronic Illness Coverage
Rider |
Allows you to access your policy death benefit if you are unable to perform 2 out of 6 of the daily activities of living (bathing, continence, dressing, eating, toileting, and transferring) without assistance or with deterioration or loss in intellectual capacity (cognitive impairment). |
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Unemployment |
Pays your Insurance policy premiums if you are unemployed. |
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Long Term Care Rider |
Will pay a monthly benefit to reimburse home health care and nursing home costs associated with chronic illness. |
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Terminal Illness Rider |
Access your policy's death benefit if diagnosed with a terminal illness (some states this is defined as a diagnosis of less than 24 months to live and in others less than 12 months to live). |
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So, What are the benefits of Permanent Life Insurance.
BENEFITS:
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Can provide LIVING BENEFITS (see above section). |
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Over time, permanent insurance may be more economical than term insurance since premiums do not increase with age and the policy can build a cash value. |
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Policy loans and withdrawals provide access to your cash value. |
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Earnings, and certain withdrawals and loans, may qualify for tax-favored treatment. |
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If you cancel the policy, the accumulated cash value, minus any surrender charges (which may or may not exist at the time) is yours to use as you wish. |
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THINGS TO CONSIDER:
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Keep in mind, Permanent insurance is initially more expensive than term insurance, but in the long run can actually be much less expensive for a lifetime coverage. |
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Loans, including any unpaid loan interest, and cash-value withdrawals generally reduce the death benefit, which could leave beneficiaries inadequately protected. |
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If you cancel or surrender the policy, or it lapses, you may have taxable income to the extent that the total of cash value and/or distributions or withdrawals exceed your basis in the policy. |
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| NEW HYBRID TYPE POLICIES |
| RETURN OF PREMIUM TERM |
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Over the past 7 years more and more companies are getting on board with this third type of term life insurance: Return of premium Term. These products are exciting because of the value they bring to the consumer without the high premiums. Return of Premium policies are term products except that if you outlive your term policy and see it to it's completion (15, 20 or 30 years) you will receive 100% percent of the premiums you paid into the policy back to you. Consumers love these products because of the affordable premiums (often much less than permanent) and the incredible value built into their design. Be sure to ask us about these products — especially if you have determined that you want a term product.
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Highlights of Return of Premium Term Coverage:
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Less expensive than permanent coverage. |
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Returns 100% of premiums at the end of the term (if you are still living and policy is in force). |
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Return of Premium is non-taxable. |
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30 Year Return of Premium Plans are often only a few dollars a month more than standard 30 year Level Term plans. Great Value! |
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Some plans (in some states) are available with riders, including Disability, Terminal Illness, Waiver of Premium and Accidental Death Benefits. |
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