The Value of Life Insurance
Life insurance is a crucial step in planning for your future and
the future of your loved ones. It can fulfill promises made to your family if
you are no longer around by providing a death benefit to your beneficiaries in
return for premiums paid to the insurance company. Life insurance can also
provide benefits while you are living.
Advantages of the Death Benefit
Provides income tax-free money to your named beneficiary(s) that can be used to
pay funeral expenses, debt, tuition, estate taxes or virtually any financial
need you leave behind.
Can provide
business security by enabling partners to buy out the interests of a deceased
partner and prevent a forced liquidation.
Advantages of Living Benefits
The cash value growth of a permanent life insurance policy is tax-deferred1,
which means you do not pay taxes on the growth of the cash value unless the
money is withdrawn.
Loans2
or withdrawals can be taken against the cash value of a permanent life insurance
policy to help with expenses, such as college tuition or the down payment on a
home.
1Accumulated growth may be taxable
upon withdrawal. If the policy is a Modified Endowment Contract (MEC), tax
penalties may apply prior to age 59 ?. Consult a tax advisor on your specific
situation.
2Policy loans and withdrawals reduce
cash value and the death benefit and may be subject to other charges outlined in
the contract.
Assessing Your Need
The amount of life insurance you select should be dependent on your personal and
financial needs. We can assist you in determining an appropriate coverage amount
and help you decide on which type of life insurance is right for you.
Generally, you should consider life insurance if you have:
A spouse
Dependent
children
Aging parents
or a physically-challenged relative who depends on you for support
Retirement
savings that is not sufficient to ensure your spouse's future financial
well-being
A sizable
estate
A business
Life Changes ? So Should Your Policy
As events happen in your life, your life insurance coverage may need to change
to adapt to your current needs. Some life changes that may require you to
reevaluate your coverage include: marriage, divorce, a new baby, purchase of a
new home and retirement.
Types of Life Insurance
There are several different types of life insurance products available. The most
common include:
Term Life Insurance
Term provides life insurance protection for a specified period of time. If you
do not currently have life insurance, term can be a good place to start. It's
generally less expensive than permanent life insurance, and is available in
varying term periods with fixed premiums from a one- (annual renewable term) to
20-year period (level term). Furthermore, term insurance is sometimes
convertible to permanent coverage, providing you with flexibility as your needs
change.
Whole Life Insurance
Whole life is a form of permanent life insurance that remains in force during
the insured person's lifetime, provided premiums are paid as specified in the
policy. Whole life insurance can build cash value.
Universal Life Insurance
Universal life is a form of permanent life insurance characterized by its
flexible premiums, flexible face amounts and unbundled pricing structure.
Universal life can build cash value, which earns an interest rate that may
adjust periodically, but is usually guaranteed not to fall below a certain
percentage.
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