Decisions on how to protect your family financially
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What are you leaving your loved ones when you die? What if your spouse died, can you make it on one income? If one of you is a stay at home parent, can you replace all of the value that parent had provided to the family - what they did now has to be paid to someone else to provide.
What standard of living will they have after paying off debts? Can they keep the house or will they be forced to sell?
Life insurance is there to help pay off debts so the survivors can stay where they are if they want. If you have mortgages, student loan debt, etc. and you do not have assets to cover those debts they fall to your family to cover. Is that what you want to pass onto them?
The cost of a funeral can be between 5,000 and 10,000 with money due at time of service unless you have insurance to cover it.
Some carriers have no medical exams for policies under 250,000. Height and weight charts vary by type of policy and by carrier along with medical and family history questions so be prepared to discuss any issues with your agent in order to find the best carrier that fits your needs. Policies over 250,000 will have a medical exam involved.
At an insurance review, we can look at your financial situation and prepare recommendations on which type of life insurance fits your financial situation. The final decision is yours, we want you to be able to make the best-informed decision.
Term Life Insurance
Term life insurance provides coverage for a certain time period. It’s designed only to protect your dependents in case you die prematurely. If you have a term policy and die within the term, your beneficiaries receive the payout. Common terms are 10, 20 or 30 years depending on your age when you apply for them. The cost, or premium, stay the same throughout the term.
Things to consider when looking at term length and the amount of coverage.
Choose a term that coincides with the years you’ll be paying the bills (mortgages, student loans, etec. ) and want life insurance coverage in case you die early.
Buy an amount your family would need if you were no longer there to provide for them. The payout could replace your income and help your family pay for services you perform now, such as childcare.
Ideally, your family’s need for life insurance will end around the time the term expires: Children are now adults, the house is paid for, and you built a savings package as a financial safety net.
Whole Life Insurance
Whole life is a type of permanent insurance that provides lifelong coverage and includes an investment component known as the policy’s cash value. The age at application and policy amount determines premium costs. The cash value grows slowly over the course of the policy life. Cash value growth is tax-deferred, meaning you won’t pay taxes on its gains while they’re accumulating. If you surrender the policy the difference between premiums paid and the cash at surrender is the amount taxable.
You can borrow money from the account, but if you don’t repay policy loans with interest, you’ll reduce your death benefit.
Things to consider with whole life:
The premium remains the same for as long as you live
The death benefit is guaranteed
The cash value account grows at a guaranteed rate
Depending on the carrier some whole life policies earn annual dividends. Dividends can be paid in cash, leave them on deposit to earn interest or use them to decrease your premium, repay policy loans or buy additional coverage. Dividends are not guaranteed.
Universal Life Insurance
Universal life insurance is a type of flexible permanent life insurance that offers the low-cost protection of term life insurance and like whole life insurance a savings element. The savings element is invested to provide a potential cash value buildup. Unlike whole life insurance, universal life insurance allows the policyholder to use the interest from his accumulated savings to help pay premiums over time. Also, the death benefit, savings component, and premiums should be reviewed by the policyholder and altered as circumstances change.
Final Expense Life Insurance
Final expense insurance is just what it says it is. It is an insurance policy used to pay the costs for burial and funeral services when the named insured dies. Policies like this help to ease financial burdens placed on a family when an insured loved one dies.
These are typically small whole life policies that ranging from 2,000 to 25,000 in coverage, basically just enough to cover the final expense costs at the funeral home and burial costs.
Many carriers require no medical exam as with traditional life insurance policies. There still may be health questions and a possible waiting period before full benefits are available.