Life Insurance

familyIn its simplest form, life insurance is meant to provide safety and security for the ones we love.

Life insurance is commonly used to:

  • Cover last expenses and immediately provide cash for surviving family members
  • Pay off mortgages and other debts
  • Eliminate tax liabilities triggered at death
  • Replace lost income for the surviving spouse and dependent children
  • Provide education funds for children
  • Provide a charitable testamentary gift

In addition to meeting your personal planning needs, life insurance can also play a large role in addressing business risk management and succession planning.

Types of life insurance include:

Permanent, Universal Life, and Whole Life; insurance that you can buy until you die versus Term life insurance, which you have until the term is over or you die, whichever comes first.

Term Life insurance provides a benefit to your beneficiary IF you die during the TERM of the insurance policy. You buy Term Life for INCOME REPLACEMENT in the event of your UNTIMELY death. Typically, you would want the term of the policy to be: During the time your minor children are dependent on you; before you retire, if you have a spouse that depends on your income; and pay off mortgages and other debts.

Whole Life insurance pays the beneficiary WHEN you die. They are not as popular as they were 30 years ago and in my opinion the only circumstances that I would offer it to you is if you have a disabled that will never be economically independent or you will be having a huge inheritance tax bill when you die and you want your kids to have some cash to pay the taxes when they inherit.

and invested wisely (and didn’t use in retirement). BTW, I feel the same way about annuities, but that’s another post.

In general, most people need term life insurance for the time their kids are at home and before they are living fully off retirement benefits and/or their savings. They need enough for income replacement and that is why I highly recommend Disability Income Insurance  (Click here for more information)

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