Term Life & Whole Life Insurance

What do you need to know about life insurance?

• How can you protect your family?
• How do you understand what your policy says?
• What are the different kinds of life insurance policies?
• Why do I need life insurance?

Life insurance pays your beneficiary when you die; but, how do you know what kind of life insurance to buy, how much insurance should you purchase, and how much should you pay for your policy?  

What are the reasons for purchasing life insurance?

Personal

• To replace family income
• To plan for retirement
• To fund education
• For estate planning

Business

• Buy-sell plan funding
• Key person
• Executive bonus
• Deferred compensation
• Split dollar

Life insurance is like other types of insurance in that you can buy a lot of it or a little of it.  Depending on the type of life insurance you buy, you may pay more, or you may pay less for the same benefits.  If you are younger and/or healthier, you will pay less for your policy.  

How much life insurance do you need?  

One guideline suggests that your death benefit should be about eight to ten times your annual earnings.  There are many factors that can influence your decision.

• Do you have other sources of income?
• What size is your family?
• Does your spouse work?  What is his or her earning capacity now and, in the future?
• How many people are financially dependent on you?
• Will your family will receive any other benefits, such as Social Security?
• Does your family have other special needs?

How much life insurance should you buy? 

Whatever kind of insurance you purchase, make sure it provides enough of a benefit to meet your family’s needs if something should happen to you.  What amount of death benefit will your family need?

What kind of life insurance should you buy?

Basically, there are two types:

• Term Life:  Term life insurance provides coverage for specific periods of time, similar to rental insurance. You can usually renew term life policies, but if there is a change in your health, you may be faced with a significant increase in your premium.  You also may not be able to renew the policy once you reach a certain age.  Term life insurance pays the death benefit if you die during the policy’s term of coverage period.
• Cash Value, which includes Whole Life, Universal Life and Variable Life Insurance:  With cash value insurance, the insurance company invests a portion of your premium and it builds in value, or it earns a specified interest rate.  You can borrow against this amount or withdraw an amount of money, but this amount will be deducted from the death benefits when you die. Cash value insurance pays the death benefit upon your death, at any time in the future, as long as the policy is still active.

In conclusion, there are many factors to consider when purchasing a life insurance policy.  Please contact our office for valuable assistance in choosing the life insurance policy that will best fit your need, whether it be for personal reasons or business purposes.