Life insurance has many uses, but one size does not fit all. Almost all insurance companies have now updated their life expectancy tables to reflect the fact that we are now living longer.
- If a person has life insurance and the policy is more than 2 years old, they should absolutely have their policy reviewed by a knowledgeable insurance professional.
- Assuming that the applicant still has their health, there is a very good chance they may be able to dramatically increase the amount of coverage they have at no additional cost, or simply lower their cost of their current coverage.
Here are just some of the reasons you should consider life insurance:
- Help replace your income and provide financial security for your dependents.
- Help pay final expenses.
- Create an inheritance for your heirs.
- Help pay federal, state, inheritance, and estate taxes.
- Make significant charitable contributions.
Life Insurance: An Introduction
Deciding to protect those who depend on us with a sufficient amount of life insurance protection is a responsible and caring act. Life insurance can provide those who are left behind with a lifetime of financial security. Several types of life insurance are available to meet your needs. There are two main categories of life insurance.
Term life insurance offers protection for your loved ones for a specified period of time—usually from one to 20 years. If you stop paying premiums, the insurance stops. Term policies pay benefits if you die during the period covered by the policy; but they do not build cash value. If you want life insurance for a limited time—long enough to meet your anticipated responsibilities to those who depend on you—term life insurance may be right for you. A breadwinner might, for example, buy a term policy that matches the length of a home’s mortgage. Premiums for term insurance are often higher as you get older.
Term life insurance snapshot:
- Easy to understand
- Affordable way to get maximum coverage
- Increases in cost after the specified period
- Builds no cash value
Permanent life insurance policies do not expire; they are intended to protect your loved ones permanently. Some types of these policies accumulate cash value, although they should not be purchased solely for that use, since their primary purpose is to provide protection. Permanent life insurance policies have variations. Your advisor can provide you with specific details to help you choose the policy that best serves your needs. If you value added security, flexibility, cash value and lifetime coverage, some form of permanent life insurance may be right for you.
Permanent life insurance snapshot:
- Protection for life, as long as you pay your premiums
- Can build equity in the form of a cash value
- Offers flexibility and many options to choose from
- Initially higher premiums than term life insurance, but more cost-effective in the long run
Term and Permanent life together. Don’t think that you’re limited to one or the other; you may find that a combination of term and permanent life meets your needs best.
For example, the foundation of your life insurance plan could be permanent life, supplemented by term life during your family-building, mortgage-paying years when coverage needs are typically higher.
How Much Do I Need?
There are many ways to determine how much life insurance you may need. Many of these determinations depend on your personal situation and preferences toward retirement and lifestyle. Perhaps you, like many people, want enough life insurance to make sure your family can continue to live their current lifestyle after your death. If the primary purpose of life insurance is to provide annual income for your loved ones, the insurance amount will, ideally, be enough to replace what you would have earned until the age at which you would have retired.
Your goal should be to develop a life insurance plan (through one or more policies) that, following your death, compensates for the loss of your economic contribution.
Life Insurance is an area of expertise at Educators Advantage Group and we can custom-tailor a plan that meets all your goals and objectives. We look forward to assisting you in leaving a legacy that you can be proud of.
Contact your Educators Advantage Group Advisor to get started.
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