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LIFE INSURANCE
For You and Your Family
There is nothing more important than the well-being and future of your loved ones. What kind of safety net have you provided for your family? Life insurance is a crucial step in planning for your family's future. The death benefit is typically income tax free and can be used to:
- Cover funeral and final expenses
- Repay mortgage debt or other types of debt
- Provide income replacement to ensure your family's financial survival
- Secure your children's future education dreams
- Ensure that a family business will pass to your intended survivor.
Your need for life insurance is dependent on your personal and financial needs and goals. As your life changes, your life insurance coverage may need to be updated to adapt to your new needs. We offer a wide variety of policies to provide you the protection that is right for you now, and in the future. Let us assist you with questions such as:
How much Life Insurance Do I Need?
Everyone's life insurance needs are different. A rule of thumb is 7-10 times your yearly salary, but obviously this does not fit everyone. There are many things to consider. What kind of lifestyle do you want to provide for your family? How long of an adjustment period is needed? Would your working spouse have to stop working to raise the children if something happened to you? You should also take into account any outstanding debts. We can help you complete a simple needs analysis to determine the amount of insurance that is appropriate for you and your family.
Term Vs. Permanent Insurance?
Once you've figured out how much insurance is adequate then it is time to move on to the next question. Should I get Term or Permanent Insurance?
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Term Insurance
Term insurance is generally the least expensive and least complicated type of life insurance. It provides insurance protection at a low cost for a specified period of time such as 1, 10, or 20 years. If you die within the term period, a death benefit is paid to your beneficiary. If you are still living at the end of the term, protection ceases unless the policy allows for a renewal period. Term plans usually allow for a conversion to permanent insurance without having to have a medical or provide other health information. There is no cash value element with term insurance. Premiums are very affordable initially, but may become unaffordable later in life. There are several types of term insurance including Annual Renewable Term, Level Term, & Mortgage Decreasing Term.
Who's it for?
- People that need protection for a specified period of time.
- Those who need a large amount of insurance protection
but have limited budgets.
- People with specific business needs.
Permanent Insurance
Permanent policies can provide a death benefit for your entire lifetime and offer a savings or cash value (equity) component as well. There are a variety of plans from those with fully guaranteed premiums, cash values & death benefits to those that offer flexibility of premiums, interest rates, underlying investment and death benefit options and anything in between. Permanent life insurance policies enjoy favorable tax treatment. Cash value growth is generally on a tax-deferred basis, meaning that you pay no taxes on any earnings in the policy so long as the policy remains in force. And money can be taken out of the policy without having to pay taxes, since policy loans generally are not considered taxable income, and withdrawals generally can be taken up to the amount of premiums paid without being taxed.
Who's it for?
People who:
- Know their need for life insurance is long term.
- Want to accumulate cash value in order to maintain level premiums of their policy, or to provide funds for education, retirement or other future goals.
- Want to take advantage of tax-favored treatment of cash value life insurance policies.
- Want to use life insurance for estate planning.
Consumer advocates have been openly critical of permanent or cash value type policies. Each individual's situation requires analysis and to advise that term is the one answer for all seems a bit narrow focused. We can assist you with determining whether permanent or term insurance is the right choice for you.
What kind of life insurance policy do I need?
The types of policies available are numerous. The major categories of policies are Term, Whole Life, Universal Life, & Variable Universal Life. See a general description for each below.
Term Life Insurance
Annual Renewable Term (ART) - Provides insurance for periods of one year at a time and usually is renewable by paying the premium which increases each year.
Level Term - Provides insurance for a specified number of years, 10 or 20 years for example, in which the premium payment and death benefit is usually level.
Mortgage Decreasing Term - insurance that systematically decreases from year to year. Premium payments are usually level.
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Whole Life Insurance
For generations, families have relied on the essential financial security that Whole Life Insurance provides. Your parents or grandparents might have had this kind of policy. In addition to paying a death benefit, Whole Life is also a cash value builder. This type of policy generally has a level premium that is guaranteed never to increase for life and the policy states what your cash values will be at each year. Certain participating policies may also pay a return of surplus charges in the form of dividends to the policyholders. Non-participating policies don't have dividends but the premiums tend to be a little less.
Benefits of Whole Life:
- Permanent coverage that can never be cancelled, provided premiums are paid when due.
- Generally, the ability to borrow from cash value on a tax-free basis.
- The security of the guarantees regarding death benefit, premiums, and cash values.
Universal Life Insurance
Universal Life is a flexible life insurance policy that combines insurance coverage with an accumulation fund. A portion of your premium goes to pay for the death benefit protection and the remainder goes into the accumulation fund where it earns interest at the current stated rates. Universal life allows you to adjust the death benefit and premiums as long as you keep enough cash value in your policy to cover the administrative expenses and the mortality charges (cost of insurance protection).
Universal life policies interest rates fluctuate but are never lower than the stated minimum in the policy (typically 4%). Cost of insurance rates (not to be confused with premium) may also be increased or decreased, but never more than the maximum stated in the policy.
Benefits of Universal Life:
- Flexible coverage and premium amounts
- Competitive interest rates in a tax deferred environment
- Flexible design with unique policy features
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Variable Universal Life Insurance
Variable universal life insurance policies provide a death benefit and allow you personal control over the cash accumulation portion of your policy. These policies allow you to allocate your premium dollars among a variety of investment options, each with varying degrees of risk and reward. The options usually include equity and debt securities and some type of fixed interest account. As with any investment, there is no guarantee of performance and the death benefit and cash values could fluctuate greatly. Shares when redeemed may be worth more or less than their original cost. One should only consider variable universal life as a long-term plan to meet your life insurance needs.
Benefits of Variable Universal Life:
- Ability to direct own underlying investment portfolios.
- Tax Deferral - with any cash value life insurance policy, the growth is generally income tax deferred. However, withdrawals prior to age 59½ may result in a 10% penalty.
- Tax-Free Transfers - Transfers among underlying investment options are not subject to current income taxes or capital gains taxes, as are the transfers among the majority of other investments.
- Flexible Premiums and death benefit.
- Accumulated growth may be taxable upon withdrawal. Tax penalties may apply prior to age 59½, consult a tax advisor on your specific situation. Policy loan and withdrawals may reduce the cash value and death benefit.
From term Life to Whole Life, we will work with you to help you select the insurance coverage that's right for you and your family.
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