What is Life Insurance?
Life Insurance is a way to transfer risk away from your family or dependents you are responsible for, by providing them with cash payment called a death benefit. The goal is to leave enough cash behind to pay for expenses that your income would otherwise cover.
Do I Need Life Insurance?
If someone depends on you financially, you are most likely someone who needs life insurance.
Life insurance provides cash to your family or loved ones after your death. This cash, known as the death benefit, replaces your income and the many non-paid ways your support your household. Your family can use this cash to pay for expenses like funeral costs, a mortgage, college tuition and more.
Just a few examples of people who often answer "yes" to the question of "Should I get life insurance?" include:
MARRIED OR PARTNERED COUPLES
MARRIED OR PARTNERED COUPLES WITH KIDS
In addition to losing one partner's income, the surviving partner may have to pay for childcare and more without the other parent around to pitch in.
As the sole income earner for your family, you'll want to think about how to replace your child's only source of financial support
From cooking meals to shuttling kids to school to helping with homework, stay-at-home parents perform many critical responsibilities that would be costly to outsource.
Many surviving partners would not be able to maintain the lifestyle they worked so hard to achieve without life insurance.
Depending on the size of your estate, your heirs could be hit with an estate-tax rate of up to 45%. Fortunately, cash from a life insurance policy gives heirs access to tax-free money to pay for immediate costs and more.
Life insurance can help your business in many ways if you, a fellow owner or a key employee were to pass away.
How much Life Insurance do you need?
There are many variables to consider when determining the amount of life insurance you may need but a general rule of thumb is an amount 10 to 15 times your gross income. However, we understand that each household has a different set of goals and dependents so this amount can vary. Click below for an Insurance Needs Calculator by Life Happens, A Non Profit Organization.
As the least expensive way to buy life insurance, Term Life Insurance provides death benefit coverage for a fixed rate of premium for a limited period of time. Time periods are typically 10, 15, 20, 25 and 30 years. Rates are usually guaranteed for the chosen time period. After the period expires, the previous rates are no longer guaranteed and the rates increase substantially. Additionally, the Return of Premium products offer a rate lock for the term of the policy and when the term is met, 100% of the insurance premiums are paid back to the owner. Typical term periods for these products are 20 and 30 year terms.
Indexed Universal Life
A type of Universal Life Insurance where the earnings credited to cash value are based on a financial index such as the S&P 500 stock market index. This differs from standard Universal Life Insurance where the cash value is credited with interest based on the insurance companies investment portfolio.
Universal Life Insurance is a type of permanent life insurance where excess premium payments above the cost of insurance is credited to the cash value of the policy. Each month the cash value is debited the cost of insurance charge and expenses, then credited with interest. The interest rate is determined by the insurer, but has a contractual minimum. Premium payments are flexible and the policy remains in force as long as there is sufficient cash value to pay the cost of insurance and expenses.
Whole Life Insurance is a type of permanent life insurance that remains in force for the insured’s whole life and generally requires premiums to be paid every year into the policy. Like Universal Life, excess premiums are credited to cash value where insurance costs and expenses are deducted and interest or dividends are credited. If premiums are paid every year the life insurance death benefit is guaranteed for the life of the policy.
**Variable products are subject to investment risk, including possible loss of principal. Before investing, carefully consider the investment objectives, risks, limitations, charges and expenses of the product and its underlying investment options. This information can be found in the product and investment option prospectuses. Copies are available from my office. Please read carefully before investing.