Life insurance is a crucial step in planning for your future and your family’s future. It can fulfill promises and obligations to your family if you are no longer living.
Life Insurance death benefit proceeds, if set up correctly, are income-tax free and can be used to provide the financial security that your family may need at the time of loss. Proceeds can be used to cover funeral expenses, repay debt, provide education options, pay estate taxes and most important to allow the family to have financial stability to continue the lifestyle they had previous to the time of loss.
Life insurance may also be used to help ensure that a family’s assets or businesses will be able to pass to the intended survivor. It may secure the future of those entities and the ability to have them leave the legacy you created.
There are many different types of life insurance and a specific plan should be designed to accomplish your individual goals and needs:
TERM LIFE INSURANCE
Term life is the simplest and least expensive type of policy. Term Life insurance is the most popular type of life insurance based on the fact it is the least expensive and can accomplish all the goals needed for certain people. Plain and simple term insurance is designed so that you pay a specific premium for a specific period of time and if you die during that time the death benefit proceeds are paid to your beneficiaries. In an example you may purchase a $250,000 life insurance policy on a 20 year term. Each year you will pay a premium if nothing occurs during the year there is no cash value and the next year you will pay the same premium again. If you die during the year $250,000 will be paid tax free to your beneficiaries. These policies work best when a specific period of time is desired. “We need 20 years to get the mortgage paid off and our retirement accounts built up and our kids out of college and then we would be fine.”
WHOLE LIFE INSURANCE
Whole life insurance provides permanent protection for your dependents while building a cash value account. As the name implies this type of insurance is meant to last your whole life. You pay a set premium each year and if you die during the year a death benefit is paid to your beneficiaries. If nothing happens during the year you will pay the premium next year but you will also have a cash value account that goes along with the policy death benefit. There are usually dividends also produced by these types of policies. These dividends can be used as a distribution or to reduce premiums in the future. These policies usually have a higher premium than term insurance.
There are many types of permanent insurance including Universal Life, Variable Universal Life, and Variable Life. Each product serves a specific need and it will depend upon your individual needs to decide what type of policy best fits you.
At Frost and Conn we represent over 22 different types of Life insurance companies. Please feel free to give us a call so that we may sit down and review what you are trying to accomplish and what your needs are and then we custom design a plan and price point that works to accomplish those goals.