Last Thursday, we posted a draft of a new policy against blogs that actively promote...
Life insurance is a complex financial tool, and each family has unique needs. In order to ensure your family is properly covered, it’s important to consult with a licensed life insurance agent. To be better prepared here are some common types of life insurance and an overview of each type.
Term - Provides the most coverage for the least amount of money. This type of coverage is temporary for temporary liabilities, it provides a set amount of coverage for a certain period of time. When purchasing term, ensure the term length is long enough to cover your liabilities. If it’s too short and there is a change in your health, it may be difficult to acquire additional coverage. No matter the length of the term, try to make sure the policy is convertible. This will allow you to change the term into a universal life policy, usually without re-qualifying. This gives you a safety net in case there is a change in health and you become uninsurable.
Universal Life - Provides a death benefit as well as a cash value account. This type of coverage is ideal for long term liabilities such as final expenses, providing spousal benefits for a pension, and mitigating estate taxes. Universal life is more expensive than term life, but it can allow you to have life insurance coverage that will last the rest of your life. In addition to the death benefit, the cash value account accumulates interest tax-deferred. There are many scenarios when a universal life policy will outshine a simple term plan.
Indexed Universal Life - Provides a death benefit with a cash value account that earns interest based on an index, the most common being the S&P 500. This type of coverage works similarly to the standard universal life, but allows the cash value account to earn greater interest. It allows the interest rate to go up with the market, but the interest rate will never fall below zero even during severe market downturns. These policies are typically funded with excess premium to allow the cash value account to accumulate faster. The tax advantages and flexibility make it a good choice for retirement and college funding.
As with any financial instrument it’s important to consult with a licensed professional to ensure your needs are met. Feel free to contact me with any questions or concerns you may have.
When planning for retirement there are a few things that are often forgotten. Consider these important points: