Why should I consider
purchasing life insurance?
Life insurance is a way to financially protect children and
other dependents in the event of the primary household earner’s death. The
benefits from life insurance can not only pay for funeral and burial costs, it
can also create a stream of income for dependents. Furthermore, the life
insurance death benefit can pay for financial obligations such as state taxes,
and a mortgage.
Many people purchase life insurance because they prefer to
plan for risk. Most people, would rather be prepared and have their loved ones
protected.
On our website, you can even get a quote for life insurance,
just click here!
Please note that health, age, and type of insurance
purchased will be factors in how much a policy will cost.
What types of life
insurance are there?
There’s whole life, term, variable, and universal life
insurance. These are all different and come with their own sets of pros and
cons.
In general, having a whole life policy means that you will
pay regular premiums as long as the policy is enforced or as long as you live.
Then, in exchange, the insurance company will pay a set death benefit upon your
death. Whole life insurance is popular because it builds cash value that is tax
deferred. You can surrender the policy for its cash value or take out a loan
against the policy. Under federal tax rules, loans taken out are free of income
tax as long as the policy is still in effect until the insured’s death. Once a
whole life policy is purchased, the terms are set and cannot be changed.
Term life insurance is less expensive than other types of
insurance, especially when the insured is younger. Unlike other types of
insurance, it only offers protection for a certain period of time. At the end
of the period, the policy expires, and one does not receive a refund. The main
drawback with term insurance is that premiums increase every time coverage
renews. This can eventually make coverage too expensive for when you need it
most—in later years. Still, there are versions of term insurance that offer
level premiums for up to 30 years without proof of insurability (this is called
renewable level term life insurance).
Variable life insurance gets its name for the variety of
investment subaccounts you can have within your policy. A few examples of
subaccounts include: stock; bond; and fixed interest options. These subaccounts
allow you to build your investment portfolio as a bonus. A disadvantage of
variable life is if your subaccount preforms poorly, your death benefit will
not be as high as you might like. Fortunately, your death benefit will never go
below a specified dollar amount.
Most universal life policies pay a minimum guaranteed rate
of return. Any returns above the guaranteed minimum vary with the performance
of the insurance company’s portfolio. The policyholder has no control over how
these funds are invested; funds are managed by the insurance company’s
professional portfolio managers. The big advantage with universal life is that
coverage and premiums are flexible. For example, you can at any point choose to
increase your cash value by paying higher premiums or if you happen to be at a
financial strain, you can pay less for a while.
To learn more about whole, term, variable and universal life
insurance, please click on the links provided below for a comprehensive article
on each type. Or for one of our associates at the office to answer your
questions, please call us today at 201-342-3300.
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Variable
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