With the many different options to choose from you must be wondering which one is right for you and your family. Let us help you find the plan that best fits your needs!
Temporary Life Insurance, also called “Term Insurance,” is purchased to last a certain amount of time, i.e. 10, 15, 20 years, 30 years. It is the most affordable type of insurance when initially purchased, is designed to meet temporary needs, and generally pays a benefit only if you die during the term.
Term 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 is paid off, such as your mortgage. Return of Premium (ROP) Term insurance is a type of term insurance whereby 100% of the premiums you paid for the policy are returned to you if you outlive the term of your policy.
Permanent Life Insurance by contrast provides insurance coverage for your lifetime. As long as you pay the premiums and no loans, withdrawals or surrenders are taken, the full face amount will be paid. Because it is designed to last a lifetime, permanent life insurance accumulates cash value and is priced for you to keep over a long period of time.
There are several different types of permanent life insurance to meet specific needs:
- Universal Life- As long as the stated premiums are paid, this type of permanent insurance is designed to last anywhere from ages 90-120. The premium amount does not change.
- Index Universal Life -This type of permanent life insurance provides for flexible premium payments that will provide a death benefit as well as grow tax-free cash value. The rate of growth of the cash value is determined by a market index and is not subject to loss if the market index is negative.
- Whole Life – Dividends are paid, allowing the build up of tax free cash value in the policy. Premiums are fixed.
- Final Expense – Final Expense insurance provides low death benefit amounts to cover burial and final expenses. Premiums are typically fixed.
Life insurance may be one of the most important investments you’ll ever make. It can be used for a multitude of life’s needs:
- College funding
- Income replacement
- Living benefits such as cash value accumulation, tax-favored access to cash values and accelerated death benefits
- Estate planning strategies
- Wealth transfer to your heirs, and so much more!
It’s impossible to say which type of life insurance is better because the kind of coverage that’s right for you depends on your unique circumstances and financial goals. Often, a combination of term and permanent insurance is the right solution. A majority of families either have no life insurance or not enough, leaving them one accident or terminal illness away from a financial catastrophe for their loved ones. ARE YOU COVERED?