What Is Life Insurance?
Life insurance is an affordable way to provide for your spouse, children, aging parents, and anyone else who depends on you.
Life insurance policies can help in many different situations like:
- Provide extra income to help pay funeral costs and other final expenses
- Provide extra income to help pay ongoing household bills
- Provide extra income to help pay for child car
- Provide extra income to help pay off a mortgage, credit cards, or other debts
- Provide extra income to help pay for college
How Much Life Insurance Do I Need?
An easy way to figure out the amount of life insurance you need is to multiply the annual income (after taxes) to be replaced by the number of years it will be needed. A simple way to determine the amount of life insurance needed for income replacement purposes is to multiply the annual income to be replaced by the number of years it will be needed.
If the insured is a stay at home parent and doesn’t earn an income, determine how much it would cost to have another person take over their responsibilities.
For Example, let’s say Brian makes $60,000.00 a year and wants to replace his income for 10 years, until his children have graduated college. The total amount of life insurance he will need, called a “face value” or a “death benefit” would be:
- $60,000.00 x 10 = $600,000.00
Types of Life Insurance
There are many different types of life insurance policies available. The two most common types are:
- Term Life Insurance
- Permanent (Or Whole) Life Insurance
Term Life Insurance
Term life insurance provides financial protection for a set term, which is usually 10 – 20 years in length. Depending on your policy, your payments are usually level and fixed over the term. You may also have the option to continue your coverage. Term life insurance is usually a more cost effective option.
Term Life Insurance Can Help:
- Replace lost income during working years
- Provide a general safety net for your beneficiaries
- Ensure that your family’s financial goals will still be met
- Paying off a mortgage
- Keeping a business running
- Paying for college
With term life insurance your benefits are paid at one time in a lump sum. All this means is that that you can use the term life insurance benefits you receive to replace lost income, but that it is not paid out to you in parts like a normal paycheck.
Permanent Life Insurance
Permanent life insurance, sometimes referred to as whole life insurance, is designed to provide coverage over a lifetime. Permanent life insurance usually has higher payments than term life insurance because of the lifetime coverage. Permanent life insurance also has a “cash value” that functions like a savings account. The amount you pay is usually a fixed rate, and the cash value of the policy may become tax-deferred over time.
Permanent Life Insurance Can:
- Provide lifetime coverage
- Provide a way to accumulate a tax-deferred savings
- Help preserve the wealth you plan to transfer to your beneficiaries upon passing on
Get In Touch
No matter what your situation is, we have a solution for you! Give us a call today and set up a consultation. We can discuss your options, and answer any questions you may have. We are dedicated to finding the best solution for you and your unique situation.