Life Insurance Peace Of Mind

What’s the one thing you care about more than anything else? Most of us would say “My family.” But not everyone asks themselves “How would my family survive if I’m not here?” That’s what life insurance is for — to protect and support your family if anything happens to you. Right now, your family depends on your financial support. Life insurance will provide for their financial needs, ensure that their lives are not disrupted, and will help them fulfill the dreams they’re working to realize now, even if you’re gone.

Life insurance is a good thing. Some employers provide life insurance to their workers as a benefit, but most of the time, it’s only worth one year of the employee’s salary. And that probably won’t be enough to take care of the ones you love.

A good life insurance agent can help you figure out what your family needs to survive and prosper, and explain the various types of life insurance that are available to meet your specific needs. Your agent will help you determine the level of coverage your family needs.

Cash Needs There are two main considerations. Your family’s cash needs, and their income needs. Cash needs are the costs your loved ones will face right away. Like the final expenses after a death. They include burial and funeral costs, paying off medical bills or costs related to an illness or accident, and sometimes attorney’s fees.

Cash needs also include the day-to-day bills you help your family pay. Without you, they may face challenges paying credit card or utility bills, or the current mortgage payment. The Life Insurance Marketing and Research Association, or LIMRA, is a worldwide research, learning and development organization. It calculates family needs before and after the death of its major income earner. According to LIMRA, if you take care of your family’s cash needs, then they may not require as much income as you brought in — as they continue to live their lives.

Income Needs - This is the income your family will need going forward, after the initial cash costs are settled. A good insurance agent will help you think of everything you need to calculate this. The agent will consider how long it will take your family to recover after your death, and the extra income that may be required while they get back on their feet. This money can be used to pay off your mortgage completely. Income needs also include education costs for your kids, and the possibility that your spouse may want to go back to school as well.

Now, to the two basic types of life insurance to consider — Term Life, and Permanent Life Insurance. To put it very simply, Term Life is like renting an apartment, and Permanent Life is like owning a home.

Term Life - This type of insurance is ideal for those who may be on a more restricted budget. But that doesn’t mean a reduced benefit. A 30-year-old male non smoker would pay about $50 a month for a life insurance policy with a face amount of $500,000. That’s an affordable level of income tax free death benefit protection*. Even clients who take a few medications, or are a few pounds overweight can still qualify for a good risk class for coverage. Term insurance covers you for a fixed period of time, such as 5,10,or 20 years. It will provide a death benefit if you die during that period provided premiums are paid when due. But like renting, it’s a temporary solution, you don’t build equity or policy cash value with term insurance, and though the rates are lower at first, they will increase as you renew.

Permanent Life Insurance - This type of insurance is more like owning a home. Like term insurance, it too, provides a death benefit, which is generally income tax free. Premiums are higher at the beginning than term policies. But they will not increase like term insurance does and it’s a permanent solution. For example, a Whole Life policy will provide a lifetime of protection without a premium increase. It builds cash value, which can be borrowed against as a policy loan for any reason. You don’t have to pay back the loan, however the loan amount plus loan interest you owe will be subtracted from the death benefit proceeds when you die. If you don’t touch the cash value, you could end your out-of-pocket premium payments at some point, by using the accumulated cash value in the policy to help pay the premium. Please note that because in this arrangement premiums are paid by using non-guaranteed policy values, a reduction in the applicable dividend scale for the policy may result in further out-of-pocket cash premium payments.

Apart from Whole Life, there are other types of permanent life insurance such as Universal Life. A life insurance agent can explain both and give you information to make an informed decision as to which type would better meet your goals. Your family is one of the most precious things in life. Now is the time to think about their future, and a good agent and insurance company will work hard to ensure that you have the best coverage, for the best price, to protect them and give you peace of mind.