So what's all the fuss about anyway? Whole Life Insurance or Term Life Insurance depends on your needs. Both are effective and necessary but your cash reserves and assets determine how much and which policies you should have. I will discuss some of the myths and miss information but most importantly I will explain the uses for both types of insurance. Here goes!
Work Insurance
So you have that policy at work and feel that you don't need anything else. What happens to your coverage if you lose your job? It's gone! And if you have had any health issues or just the fact you are a little older life insurance will cost you MORE. You need to have your own privately held insurance so no matter what you are covered. Is your spouse or children covered under your work policy? What happens if you leave your job, their insurance is GONE! Are you getting the picture?
Accident Insurance
You got a great deal on some extremely cheap life insurance right, $100,000 for $17 a month. Check the fine print; you probably have a form of very limited life insurance called Accidental Life Insurance. This type of policy DOESN'T pay out if you die from natural death including disease. If it sounds too good to be true it probably is.
Life Insurance Riders
A rider is an attachment to a primary policy that can cover a spouse or child. The issue with these types of plans is if the primary policy lapses or the insured dies your coverage goes away. I recommend you use these if available on your policies but only as a back up.
Term Life
What is the purpose of Term Life Insurance? Term insurance covers loss of income and there is more of a need for this type of insurance during your income producing years. Let's say you are 35 years old, married with three children. You have a $200,000 mortgage, two car payments, and $10,000 credit card debt. Your need for term life insurance is pretty apparent because if you are the main bread winner, how is your family going to survive, without you? They will survive but not having the same lifestyle they have now. Term Life insurance could pay off the house and give them some money to live on for a year or so after your death. It can also cover your final expenses if necessary but we reserve this for whole life insurance which I will discuss later. Term life insurance is pretty inexpensive and covers 5, 10, 20, or 30 year time periods. The idea is you will be paying down your debt and your need will diminish for term life up to your retirement age. That takes us to the next step.
Whole Life Insurance
Whole life insurance is also called cash value insurance and is usually reserved for burial/final expenses. It is more expensive than term insurance but understand it does carry a cash value component, which means you have a little savings account you can draw from in the future. This cash value can also be used to pay premium if you miss a payment. Face amount for these are usually pretty small compared to term life policies but whole life policies are for burial expenses. The national average is $10-15,000 you may want to have more or less just depends on your needs. If you would like to pass on a large chunk of money tax free, whole life insurance is a way you can accomplish it. Single pay whole life insurance policies allow you to take a lump sum and give a paid up life insurance policy. It's a one payment plan. Let's say your are 45 years old and have $30,000 cash in an investment or bank account. That $30,000 gets your family $80,000+ of death benefit, more than doubling your money. This is an actual quote from one my insurance companies.
Indexed Universal Life
Want to make sure your children or grandchildren have a legacy that you established? You are probably thinking it takes allot of money right? Well first I'll explain what they are for. These are life insurance products but the main use is to develop a cash account. There are two pots of money in these policies, the cash value account and the death benefit account. Why these are good for young people is the cost of insurance is low so more money goes into the cash account. The money in the cash account has interest applied dependent on the market, this money and interest is sometimes compounded and can create a sizable nest egg. Let's say you have a 5 year old daughter, your budget is $65 a month for life insurance for her. This would purchase $196,000 of coverage. At age 65 she would have cash surrender value of $450,000 and a death benefit of $650,000. If she lived to 80, the cash value is nearly $1.5 million. This takes care of your children's, children. This is also a quote from one of my companies!
This is not all you need to know but if you need some help, want your policy verified, or want to put some coverage in place, make a comment or contact me directly. I hope I cleared up some of your fog. Later!
Get a policy or free quote at www.affordablelifeproducts.com
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