Your insurance needs are unique. The solutions you choose should feel like a good fit, not a compromise.
Having a better understanding of your overall financial situation is a key step in determining what type(s) of life insurance would best meet your needs.
A solid financial foundation is comprised of assets that provide protection and savings. Choosing these assets requires disciplined and thoughtful consideration including what role life insurance should play in helping you build a solid financial foundation.
When you’re choosing a life insurance policy, it pays to consider your needs and the length of time you’ll need coverage. I can help you analyze your needs and help you decide if single or joint life insurance is appropriate for your planning goals, which type of policy is best for your budget, and which type of insurance best fits your needs: term, traditional portfolio-based, a blend of term and traditional portfolio-based, or variable life. A combination of policies may also be appropriate.
Products at a Glance
Permanent life insurance provides life long protection in exchange for a level premium payment. Although life insurance is most often purchased to provide a death benefit, it can also provide living benefits. The cash value of a permanent life insurance policy grows income-tax-deferred. It can be used to provide an income stream during retirement or can help meet other long-term financial goals, such as funding a college education for a child or grandchild.
The guaranteed accessibility to the cash value makes permanent life insurance one of the most valuable assets people can own. However, the impact of taxes can make some options more valuable than others. For example, as a general rule, when policy values are surrendered, the amount received is not taxed until it exceeds the amount paid in premiums. Income tax is due on the gain.
Key Policy Features:
- Life-long coverage.
- Guaranteed level premium.*
- Guaranteed minimum death benefit.*
- Guaranteed cash values.*
- Dividends can be used to increase policy values.
- Dividends are not guaranteed.
- Underlying values are invested in the insurance company’s general account.
When to Use:
- When you need a good foundation of traditional insurance.
- When you can commit to paying an ongoing level premium.
- When you need strong policy guarantees.*
- When you want to build cash values with a conservative approach.
- When you want to be eligible for dividends. Dividends are not guaranteed and are subject to change by the Board of Trustees.
- When you want to have the option to change your policy to “paid-up.”
Term Insurance is a policy with a set duration limit on the coverage period. Once the policy is expired, it is up to the policy owner to decide whether to renew the term life insurance policy or to let the coverage end. This is similar to renting a home. The home is yours to live in until you decide to move on. You don’t retail ownership of the home and there is no equity in it. These types of policies provide a stated benefit upon the death of the policy owner, provided that the death occurs within a specific time period. However, the policy does not provide any returns beyond the stated benefit, unlike permanent life insurance policies, which have a savings component that can be used for wealth accumulation.
Watch the video below for a Life Insurance 101 on the topic. If you need to quickly determine the amount of life insurance that is right for you click the following link. Please don’t hesitate to connect with us to determine a specific solution for you and your situation.
Life Insurance Calculator
A type of flexible permanent life insurance offering the low-cost protection of term life insurance as well as a savings element (like whole life insurance) which is invested to provide a cash value buildup. The death benefit, savings element and premiums can be reviewed and altered as a policyholder’s circumstances change. In addition, unlike whole life insurance, universal life insurance allows the policyholder to use the interest from his or her accumulated savings to help pay premiums.
Universal life insurance was created to provide more flexibility than whole life insurance by allowing the policy owner to shift money between the insurance and savings components of the policy. Premiums, which are variable, are broken down by the insurance company into insurance and savings, allowing the policy owner to make adjustments based on their individual circumstances. For example, if the savings portion is earning a low return, it can be used instead of external funds to pay the premiums. Unlike whole life insurance, universal life allows the cash value of investments to grow at a variable rate that is adjusted monthly.
A form of permanent life insurance, Variable life insurance provides permanent protection to the beneficiary upon the death of the policy holder. This type of insurance is generally the most expensive type of cash-value insurance because it allows you to allocate a portion of your premium dollars to a separate account comprised of various instruments and investment funds within the insurance company’s portfolio such stocks, bonds, equity funds, money market funds and bond funds. In addition, because of investment risks, variable policies are considered securities contracts and are regulated under the federal securities laws; therefore, they must be sold with a prospectus.
The major advantage to variable policies is that they allow you to participate in various types of investment options while not being taxed on your earnings (until you surrender the policy). You can also apply the interest earned on these investments toward the premiums, potentially lowering the amount you pay. However, due to investment risks, when the invested funds perform poorly, less money is available to pay the premiums, meaning that you may have to pay more than you can afford to keep the policy in force. Poor fund performance also means that the cash and/or death benefit may decline, though never below a defined level. Also, you cannot withdraw from the cash value during your lifetime.
Make sure that you schedule a consultation to determine what type of insurance is best for your goals.