Life Insurance
No one likes to think about their own mortality but it’s a topic that shouldn’t be avoided. Buying life insurance is one way to provide financial security for those left behind after your death.
Our brokers can help you understand your current financial situation, define your needs and the standard of living you wish to maintain for your family, and educate you about your life insurance options, including coverage amounts, and how different policies work.
What can life insurance do to help your dependents?
- Replace your lost income so your family can maintain the same standard of living they had when you were alive.
- Pay off your mortgage and other personal debts and loans, like credit cards, student loans, and home equity loans.
- Pay your final expenses, such as medical bills and funeral costs.
- Pay education and college expenses for your children.
- Help you continue a family business.
- Protect your spouse’s retirement plans.
- Create a financial cushion for emergencies.
Life Insurance options
Guaranteed Term Life:
Term life insurance is risk protection and is designed for income replacement. It is protection from the unexpected. A term life insurance policy provides coverage for a limited or specific period of time, usually 10, 20, or 30 years. At the end of the term, it expires. The policy does not provide any returns beyond the death benefit. In the simplest terms, if the insured dies within the “term,” the death benefit will be paid to the beneficiary.
Term life insurance is the most affordable coverage because if offers protection only for a specific number of years. It’s primarily used to provide coverage for the insured’s financial responsibilities and is often one component of a larger estate plan or financial strategy. For example: an individual might choose a term insurance policy which expires near his/her retirement age. By this time, the mortgage would be paid, the children would have finished their educations and moved on with their own lives, and he/she would have sufficient funds in savings, retirement accounts, pensions, etc. to have financial security.
Term life policies are also an effective way to fund business operating agreements, or offer benefits to key personnel. Term policies provide a clean and simple way to address complicated legal arrangements or partnerships, as well as an attractive benefit that can help retain important executives or highly productive employees.
Permanent Life:
Permanent life insurance policies are guaranteed to remain in force for the insured’s entire life, as long as the premiums are paid and the policy doesn’t lapse. Premiums are fixed and paid until the insured’s death. A permanent life policy has two components…insurance and investment. The insurance component pays a specific amount upon the death of the insured. The investment component accumulates cash value that the policyholder can borrow against or withdraw. There are two types of permanent life: whole life and universal life.
- Whole life insurance – Premiums on whole life policies are fixed and never increase as long as the policy remains in force. This policy offers a guaranteed cash value accumulation, and the insured may borrow against the cash value of the policy or withdraw it later in life. It is generally considered the safest kind of financial investment because of the guaranteed interest rate.
- Universal life insurance – Premiums on universal life are more flexible. This policy allows you to tailor your insurance to meet your changing needs while possibly building cash value. Accrued interest is usually much lower than compared to a whole life policy but the policy owner may also borrow against the cash value of the policy.
Permanent life insurance premiums are significantly more expensive than term insurance because as long as the premiums are paid, the policy always pays out at the death of the insured. In addition, depending on your life circumstances, you may not need insurance for your entire life and could overspend on an unnecessary policy.
Speak with one of Real Life Associates insurance brokers. They will ask the right questions, understand your needs and goals, explain your options, and help you make the right life insurance decision for both you and your loved ones.