The Value of Life Insurance
Life insurance is a crucial step in planning for your future and the future of your loved ones. It can fulfill promises made to your family if you are no longer around by providing a death benefit to your beneficiaries in return for premiums paid to the insurance company. Life insurance can also provide benefits while you are living.
Advantages of the Death Benefit
Provides income tax-free money to your named beneficiary(s) that can be used to pay funeral expenses, debt, tuition, estate taxes, or virtually any financial need you leave behind.
Can provide business security by enabling partners to buy out the interests of a deceased partner and prevent a forced liquidation.
Advantages of Living Benefits
The cash value growth of a permanent life insurance policy is tax-deferred¹, which means you do not pay taxes on the growth of the cash value unless the money is withdrawn.
Loans² or withdrawals can be taken against the cash value of a permanent life insurance policy to help with expenses, such as college tuition or the down payment on a home.
¹ Accumulated growth may be taxable upon withdrawal. If the policy is a Modified Endowment Contract (MEC), tax penalties may apply prior to age 59½. Consult a tax advisor on your specific situation.
² Policy loans and withdrawals reduce cash value and the death benefit and may be subject to other charges outlined in the contract.
Assessing Your Needs
The amount of life insurance you select should be dependent on your personal and financial needs. We can assist you in determining an appropriate coverage amount and help you decide on which type of life insurance is right for you. Generally, you should consider life insurance if you have:
• A spouse
• Dependent children
• Aging parents or a physically challenged relative who depends on you for support
• Retirement savings that aren’t sufficient to ensure your spouse’s future financial well-being
• A sizable estate
• A business
Life Changes – So Should Your Policy
As events happen in your life, your life insurance coverage may need to change to adapt to your current needs. Some life changes that may require you to reevaluate your coverage include marriage, divorce, a new baby, purchase of a new home, and/or retirement.
Types of Life Insurance
Term Life Insurance
Term Life Insurance provides life insurance protection for a specified period of time. If you don’t currently have life insurance, term can be a good place to start. It’s generally less expensive than permanent life insurance, and is available in varying term periods with fixed premiums from a one- (annual renewable term) to 20-year period (level term). Term insurance can sometimes be converted to permanent coverage, providing you with flexibility as your needs change.
Whole Life Insurance
Whole Life Insurance is a form of permanent life insurance that remains in force during the insured person’s lifetime, provided the premiums are paid as specified in the policy. Whole life insurance can build cash value.
Universal Life Insurance
Universal Life Insurance is a form of permanent life insurance characterized by its flexible premiums, flexible face amounts, and unbundled pricing structure. Universal life can build cash value, which earns an interest rate that may adjust periodically but is usually guaranteed not to fall below a certain percentage.