Life Insurance Awareness Month
“Life insurance is a simple answer to a very difficult question: How will my family manage financially when I die?” Its question few want to consider, but one that is entirely essential to the well-being of your family. As insurance agents, we believe strongly that if someone depends on you financially, a solid life insurance plan will be the cornerstone of a well-rounded safety net for your family.
If you’ve ever taken a minute to research life insurance, you know that there are many different options. However, the bottom line is the same: they pay cash to your beneficiaries in the event of your untimely demise. Life insurance payments can, and should be used to pay for daily expenses, mortgage payments, covering outstanding debt, college tuition, and any other payments need to maintain your family’s day-to-day existence.
What Kinds of Life Insurance Are Available?
Term life insurance provides protection at a fixed rate of payments for a limited period, usually 10, 20, or 30 years. If the insured dies during the term, the death benefit will be paid to the remaining family. Term insurance is typically the least expensive way to purchase a substantial death benefit, and as such, a good choice for families on a budget.
Both term insurance and permanent insurance use the same mortality tables for calculating the cost of insurance and provide a death benefit which is income tax free. However, the premium costs for term insurance are substantially lower than those for permanent insurance. The reason the costs are lower is that term programs may expire without paying out, while permanent programs must always pay out.
Permanent—or whole—life, policies are the quintessential life insurance policies, the kind we all have a basic understanding of or assume is our only option. These policies are designed to exist until the policy-holder’s death. Whole life premiums are fixed, based on the age of issue, and usually do not increase with age. The insured party normally pays premiums until death or policy maturation, whereupon the policy value is paid out in cash.
These kinds of policies are most appropriate when all revolving debt is paid off, education is fully funded, and a person has substantial savings in the bank. For more information, check out our post from August 15th: Understanding Whole Life Insurance
Only you can know what options best suit the needs of your family, but with some quality advice from your local insurance agency, we can help set you in the right direction. Call or come in today! Atchley & Associates wants to help put you on the path to security. Your future is now.