Life insurance is a crucial step in planning for your future and the future of your loved ones. In the event of death, life insurance benefit will help cover everyday expenses, like mortgage and household bills.
The cash received from a policy (the death benefit) can help protect your family from being burdened with debt and future expenses; like your children’s education or supplement your retirement funds. In addition to helping meet your family’s immediate financial needs, life insurance can also be used to help keep a business thriving.
Protecting yourself with life insurance can give you a certain comfort & satisfaction that your financial stability is solid, secure, and even permanent. We always have home insurance, car insurance and health insurance; but as a mother of three boys I feel like the most important insurance to be had is life insurance.
Think with me here, if you have a machine that spits out $5,000 a month, won’t you insure it in case something tragic happens? Well, that machine is you to your family…. Once you’re gone, your income is gone forever but your family’s daily expenses will continue for a lifetime.
Types of Life Insurance:
Is generally a good choice for your family in earlier years when the need is the greatest. It’s also very affordable for a high level of coverage. This may make sense if you have a young family and if budget is tight. It provides protection for a specific period of time; and generally pays a benefit only if you die during the term. This type of insurance makes sense when you have a need for coverage that may disappear at a specific point in time; like college education for your kids and mortgage.
Is a permanent coverage. It generally covers you for the rest of your life. It’s a combination of life coverage with an investment fund.This policy also pays a stated, fixed amount on your death; and part of your premium goes toward building cash value from investments of the insurance company. Cash value builds tax-deferred each year that you keep the policy; and you can borrow against the cash accumulation fund without being taxed. The amount you pay usually doesn’t change throughout the life of the policy.
Universal Life insurance (UL)
Is a type of permanent insurance policy. It combines term insurance with a money market-type investment that pays a market rate of return. To get a higher return, these policies generally don’t guarantee a certain rate.
Variable life and Variable Universal Life insurance
Are permanent policies with an investment fund tied to a stock or bond mutual-fund investment. Therefore, returns are not guaranteed yet.
Indexed Universal Life (IUL) insurance
Is permanent life insurance that offers death benefit protection when loss of life occurs. Like other forms of permanent life insurance, your premium payments may earn interest and grow the cash values of your policy. What differentiates IUL from other permanent life insurance is the way interest is credited to the policy. In addition to the company offering its own declared interest rate, IUL also offers an interest option linked to the movement of a selected stock market index over a specific period of time. The manner in which interest is credited to your IUL policy gives you the potential for strong cash value accumulation. A key benefit to remember is that it offers protection in a poorly performing market. With IUL, you don’t participate directly in the stock market and the credited interest rate is never less than zero percent, guaranteed!