INCOME STREAM FOR TODAY / LEGACY FOR FUTURE
What is life insurance?
Life insurance is increasingly becoming a tax-advantaged financial product for life, with a death benefit.
Life insurance policies are funds you save in the event of your death. In addition, life insurance can be used as a means of investment and saving, or as a tax-advantaged income stream while you are living, or provide low-interest loans without impacting your credit rating.
A contract is created between you and an insurance company, which promises to provide an amount of money (the death benefit) to your family, business or charitable organization (beneficiaries) upon your death. In return, you pay your premiums which are periodic payments to the insurance company.
Are there different types of life insurance?
Yes - there are three basic types of life insurance: Term, Universal and Whole Life. Each product functions differently from the other, and will have different financial options (wealth growth options) based on the carrier and how the policy is written.
For instance, most Term Insurance policies offer only a death benefit for a specific period of time, while other Term policies will allow you to access up to 90% of the face value while you are living, due to chronic or critical illness.
Universal Life is a great tax-advantaged wealth growth tool and can have an investment component that is Indexed (tracks up with stock market gains but is not in the market so it experiences no decline in value), or Variable (is in the stock market and experiences the gains and declines of the stock market).
Why is it important for me?
Life insurance is always important for anyone, but if you have a spouse, if you're a parent, if you have an aging loved one who depends on your income, if your retirement savings are not enough to insure your future, if you have a sizable estate, if you own a business, if you have bills, a car loan or a mortgage, if your family depends on your income to live, if your income is necessary to maintain the family household and if your dependents may have financial problems if you die, life insurance is necessary for you. The policy's death benefit can fund your dependents' needs for a long time after you're gone.
Am I making the right decision?
By buying life insurance, you're making a long-term commitment. That is why it is very important that you know exactly what you're buying and get the right advice from the people who know about life insurance. Before buying any policy, ask yourself these questions:
Doing some homework is a good idea. Read, ask, and learn about it before you make your decision.
When should I buy Life Insurance?
To more accurately determine your family´s life insurance needs, it is important to take into consideration what your life stage is and understand what your responsibilities might mean in financial terms, should an unforeseen event occur.
A great moment in your life: there are two of you now. It is time to plan for the financial well-being of your spouse, should anything happen to you. Regardless of how dependent on your income your spouse may be, it is important to provide for the future should you pass away first.
Starting a Family
Now there's a baby on the way. A child that will depend on you and your income for many years to come. It is your intention to always be there for your child, but that may not be the case. Therefore, it is crucial to secure the financial future of your little one, should anything happen to you.
The house you've always dreamed of is now yours. Your family now has the tranquility of owning a home. Yet, there is a mortgage to pay and that responsibility will fall on your loved ones should anything happen to you. It is time to secure your family's home and financial future.
Planning for College
Have you planned for your children's education? You can insure their future if something should happen to you, by protecting their college expenses.
If you have reached the stage in your life where you want to retire, you need to think about insurance because you still have financial decisions to make. You don't want to leave your loved ones with financial burdens such as your funeral expenses.
Copyright Christine Horne. All rights reserved.