Life insurance is the cornerstone of your family’s financial security. If you have others who depend on you financially, it is very likely that you need it. Buying life insurance protects your family’s financial resources against the uncertainties of life so you can secure their future.
There are two basic life insurance plans: term and permanent. Whether you buy term or permanent insurance will depend on the amount of insurance you need, and how long you need the insurance to be in place.
Term Insurance Features & Benefits
- Provides temporary coverage at a fixed rate of payments for a specified period of time which can range from 10 to 40 years
- After the term expires, coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage
- Normally, term insurance policies cannot be renewed after age 80.
- If the life insured dies during the term, the death benefit will be paid to the beneficiary
- Premiums are initially less expensive when compared to permanent life insurance
- Policy has no cash value
- Suitable where there is a temporary specific need with a definite time requirement, such as a mortgage debt
Permanent Insurance Features & Benefits
- Combines a death benefit similar to a term insurance plan with tax-sheltered savings arrangements
- Are meant to be held and paid into for the duration of the insured's life
- This savings portion can build up cash value, against which the policy owner can borrow funds, or in some instances, the owner can withdraw to help meet future goals.
- The tax advantages of a permanent life insurance plan can make it a valuable investment over a long period of time.
- Permanent insurance costs are usually guaranteed when you first purchase the policy and can be guaranteed level for life (they don't increase as you age, even if your health changes)
- Permanent life insurance is an excellent choice if you want lifelong coverage, to meet such needs as final expenses, minimize tax on your estate, or leave a legacy.
- Another advantage is the tax-sheltered equity in the form of a cash value over time