LIFE INSURANCE
Family Protection, Legacy Gifting, Business Protection Life
WHOLE LIFE INSURANCE
Whole life insurance covers you for as long as you live, assuming the premium payments are made. In general, you will pay the same amount in premium for as long as you own the policy.
When you first take out the policy, premiums can be several times higher than for an equivalent term policy. Over time, however, the premium payments for whole life are smaller than you would pay to continually renew a term policy over the course of your lifetime.
Alternately, some whole life policies allow payment for a shorter period of time, such as for 20 years or until age 65. Premiums for these policies are higher because the premium payments are made for a shorter duration.
UNIVERSAL LIFE INSURANCE
Universal life insurance is a flexible policy that lets you vary your premium payments. You can also adjust the face amount of your coverage. Increases may require proof that you qualify for a new death benefit. The premiums you pay, minus expense charges, go into a policy account that earns interest.
Charges are deducted from the account. If your yearly premium payment plus the interest you account earns is less that the charges, you account value will become lower. If it continues to drop, eventually your coverage will end. To prevent this, you may need to start making premium payments, increase your premium payments, or lower your death benefit.
Even if there is enough in your account to pay the premium, continuing to pay them means that you build more cash value for the policy.
FINDING A GOOD VALUE IN LIFE INSURANCE
What’s your plan for when tragedy strikes? Will your family be happy and taken care of with it? By protecting your current assets and your future income by providing (most times) a tax-free benefit to families, life insurance can prevent a tragedy from becoming a financial disaster for your loved ones.
Are you a business owner? How would your business be affected by the unexpected loss of a partner or a key employee? Would you be happy going into business with your former partner’s spouse? Life insurance offers protection for the business you’ve worked hard to build.
There are many kinds of life insurance, but in general they fall into two broad categories: term insurance and permanent insurance.
Term insurance is designed to meet temporary needs. It provides protection for a specific period of time (the “term”) and generally pays a benefit only if you die during the term. This type of insurance often makes sense when you have a need for coverage that will disappear at a specific point in time. For instance, you may decide that you only need coverage until your children graduate from college or a particular debt, such as a mortgage, is paid off.
In contrast, permanent insurance provides life-long protection. As long as you pay the premiums, and no loans, withdrawals, or surrenders are taken from the policy, the full face amount will be paid. Permanent life insurance accumulates cash value and is priced for you to keep over a long period of time. It can be used as an avenue for transferring wealth, tithing to a church or synagogue, business continuation, buy/sell agreements, helping a special needs child, or helping the family with final expenses.
As your personal situations change (i.e., marriage, birth of a child or job promotion), so will your life insurance needs. Care should be taken to ensure these strategies and products are suitable for your long-term life insurance needs. You should weigh your objectives, time horizon and risk tolerance as well as any associated costs before investing. Also, be aware that market volatility can lead to the possibility of the need for additional premium in your policy.
It’s hard to say which type of life insurance is best for you, because the kind of coverage that’s right depends on your unique circumstances and financial goals. The best way to figure out the amount and type of life insurance that makes sense for your situation is to meet with a qualified life insurance professional. We can help determine those circumstances and goals through a process called a Needs Analysis survey. Call Gregg John at the Mike Arnold Agency today and schedule an appointment to talk further about the benefits of life insurance for your family.