Life insurance is an essential financial tool, used to protect your family after you are gone. Additionally, some forms of life insurance can help you build assets and assist you financially throughout your lifetime. It is a wise addition to any financial plan. Life insurance can help your family:
• Pay off your debts and taxes after your death.
• Allow your family to maintain their standard of living.
• Financially support their goals and dreams.
• Have peace of mind knowing that they will be financially secure after your passing.
Certain types of insurance may also serve to:
• Provide immediate access to cash.
• Supplement your retirement income.
• Fund college tuition, business development, emergency costs, or purchasing a home.
A full evaluation and review of your needs with your financial advisor can help you determine how much life insurance is right for you. With our help, we will be able to assist in your decision as to the right amount and the best type of policy for your specific needs.
TYPES OF POLICIES:
Term | Whole Life | Universal Life | Indexed Universal Life | Survivorship | Annuities
TERM: Temporary life insurance is protection for a predetermined length of time. They generally occur in 10, 20, or 30 year time frames. Term is the simplest form of life insurance because the coverage is for a specific time and simply provides your beneficiary with a pre-specified amount of money at the time of your death. You pay a level premium coverage for the duration of the term (10,20 or 30 years). With low premiums, it affords clients to invest and save as they please and to be able to afford larger death benefits than would otherwise be possible.
WHOLE LIFE: One of the greatest advantages of whole life insurance is that it guarantees, up to age 100, a minimum death benefit no matter how long you live, assuming premiums are paid. You pay a fixed premium guaranteed for the life of the contract. Dividends, which are not guaranteed, can increase your cash value and death benefit above the guaranteed minimums. However, growth potential is limited. You cannot increase or decrease the face amount of your policy. Additional coverage requires the purchase of another policy, which entails additional premiums and evidence of insurability.
UNIVERSAL LIFE: Universal life policies were originally developed to provide flexibility to the Whole Life policies. Premium payments are flexible. After initial payment, you make additional premium payments at virtually any time and in any amount (subject to certain minimums and maximums). Your policy continues as long as there is enough cash value to cover monthly insurance charges, however your cash value and death benefit are not always guaranteed. Cash value earns interest at a rate set periodically by the insurance company and generally guaranteed not to drop below a certain level. You can increase or decrease the face amount throughout the life of the policy. Adding guaranteed features, like a No Lapse Guarantee or Lapse Protection Rider, are available at an increase price.
INDEXED UNIVERSAL LIFE: Indexed Universal Life policies can be thought of as a hybrid of the aforementioned UL policies. One main feature found in IUL’s is that the policy owner can allocate their accumulated cash values into a fixed account or into an equity index account. Also, the insured is allowed to decide how much or what percentage of the funds that they wish to put into the contract. IUL’s typically guarantee the initial principal amount. With this said, IUL’s started with a high premium will stay in-force even if future premiums are lower or skipped.
SURVIVORSHIP: This type of policy insures two people (usually spouses) under one policy. No proceeds are paid and no changes occur when the first dies. The policy remains in effect and premiums may need to be paid. The death benefit is not paid to the beneficiary until the death of the second insured. For couples who expect substantial estate taxes will be assessed on the death of the second spouse, survivorship life insurance is a smart estate planning tool. By providing a death benefit upon the passing of both insured, survivorship policies can be used to pay sizeable estate taxes and other expenses at the death of the second spouse. Survivorship policies are great when one spouse is in poor health compared to the other. As an unhealthy individual, single policies can be extremely expensive and hard to come by. By combining policies with a healthier partner, the policy is much more affordable for the two insured.
ANNUITIES: Annuities are long-term retirement savings products that help to protect you against the risk of outliving your assets. It is a contract between you and an insurance company: you receive future income in return for your current contributions. Annuities allow your assets to grow on a tax-deferred basis, protect beneficiaries with a death benefit, diversify your investments, and help you avoid the risk of outliving your assets. Future payments are guaranteed, and in some cases, for as long as you live. Speak to your financial advisor to find out which type of annuity, fixed or immediate, is right for you.