Life Insurance is the foundation when planning your family’s financial security. Choosing a life insurance policy is not as simple as checking a box and making sure you have coverage, it’s making sure you have the right insurance coverage based on your needs.
What is Life Insurance?
Let’s start with the basics. Life Insurance is traditionally known as the payment of a sum of money to a designated beneficiary upon the death of the insured person. However, depending on the policy, other events such as terminal illness or critical illness may also result in payment.
What Can Life Insurance Cover?
- Passing your home to your spouse or children free of any mortgage.
- Providing an education fund for your children or grandchildren.
- Creating an instant (income tax-free) estate for your family.
- Funding a Business Transfer, Business Continuation, or Buy-sell Agreement.
- Creating or supplementing a fund for you when you retire.
- Funeral arrangement expenses.
What Are the Types of Life Insurance?
Term Life Insurance is often considered the least complicated and least expensive coverage. A Term Policy is precisely what the name implies; insurance for a term of time or temporary period, generally 10, 20 or 30 years. With Term Life Insurance, if the insured dies before the term ends, the beneficiaries generally receive a lump-sum payment. If the insured outlives the term of the policy, it simply expires, though it usually can be renewed at a substantial increase in premium.
Whole Life Insurance policies are more expensive than term policies, but they can accrue cash value. The death benefit generally increases while the premium remains the same throughout the life of the contract.
Universal Life Insurance is similar to a whole life policy, but money is set aside for investment, with the goal of earning more money for the insured. The face value of the policy can increase or decrease with the value of the investment.
Variable Life Insurance is similar to universal life, but it generally has more investment options, such as stocks, bonds and mutual funds. The policyholder can typically choose the investment vehicle they want to use.
If you’re interested in learning more about Life Insurance and how to choose the right coverage, give us a call at (516) 431-9100.