Life insurance, like all insurance, is protection against the unknown. It should be a part of most people’s financial plan.
There are many reasons for purchasing life insurance. The most common reason people purchase life insurance is to protect those who would suffer financially if they were to die. That could be a spouse, children, aging parents or even a dependent sibling. Business owners purchase it to protect their business from a loss due to the death of an owner or a key employee. Life insurance proceeds can be used to pay potential estate taxes. Some people choose to name a charity as the beneficiary of a life insurance policy and thus are able to leave a larger legacy when they die than they ever could have during their lifetime.
Although there are some hybrid types, life insurance generally falls into two categories:
Term Life Insurance (Temporary Insurance) is usually the most affordable type and is designed to meet temporary needs, such as coverage until your children graduate from college or until a debt such as a mortgage is paid off. Term insurance lasts for a certain term, usually a number of years, and when the term is up the policy ends. Term life insurance is inexpensive when you are young since the chance of you dying in your 20s or 30s is small. It gets more expensive as you age.
Whole Life or Universal Life Insurance (Permanent Insurance) is generally used when the need for life insurance is lifelong. Because it lasts for your whole life; premiums are higher than those of term insurance. Permanent life insurance typically accumulates cash values that you can borrow against for opportunities or emergencies and offers certain tax advantages.
Life insurance, unlike health insurance, is not guaranteed issue. Whether or not a company will sell you a policy and how much it costs will be based on many factors such as your age, gender, family history, and current health. You may be required to undergo a medical examination (paid for by the insurance company) before they will issue you a policy.
We can help you determine whether or not life insurance is right for you, and if so, what type and how much insurance you should purchase in order to protect your loved ones and financial interests.
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