Protect the people you love the mostAsk yourself, “If I passed away tomorrow, what would my family do”? Life Insurance is essential if someone will suffer financially when you die.
And even though the death benefit is the priority of the life insurance policy, some life insurance policies have riders or other features that can help you in your overall financial strategy, such as cash value accumulations.
What type should I purchase?
While there are many different types of life insurance policies available, they typically fall into two categories: Term Insurance and Permanent Insurance.
This type of coverage does not build cash or investment value. Term life insurance covers you for a set period of time provided you pay the monthly premium, or in some instances, a lump sum in advance. The policy will pay to the named beneficiary the face amount of the policy (set benefit and/or lump sum) upon the death of the insured within the stated term. Depending on the policy, it may also make payments upon terminal or critical illness.
This type of life insurance policy builds up a cash value that has many benefits to the insured, such as borrowing against the policy or building a tax-deferred investment income, in addition to paying a death benefit. Whole life, variable life, and universal life are all types of permanent life insurance that accumulate cash value. It is known as permanent life insurance because it provides coverage for the policyholder’s entire life.
Living Benefits – Access to Cash Value
A unique feature of Permanent Insurance is the ability to access cash values while you are still living, including certain riders that allow you to access accelerated death benefits in the event you are diagnosed with a terminal illness that will result in death within a short period of time or if you are unable to perform daily living activities.
How much do I need?
The biggest challenge in purchasing Life Insurance is calculating how much you need to buy. Because financial situations vary so greatly, there is not a one-size fits all formula that can be applied. So how much is enough? To start, sum up your current and future financial obligations, including those expenses one doesn’t typically consider, such as funeral costs. Then, total all the resources that your surviving loved ones would be able to access to pay those obligations. The difference is a rough estimate of how much life insurance you need to buy. A thorough needs analysis by a qualified insurance agent is critical to ensure you are purchasing enough insurance to protect your loved ones.