Compare Your Life Insurance Options
How To Buy Life Insurance
Types of Life Insurance, A Comparison of Term and Whole Life
Are you wondering what to do when it comes to purchasing life insurance? Losing someone you love is always difficult, but emotional struggles don’t have to be compounded by financial difficulties.
Life insurance secures your loved ones future. Life insurance provides tax-free cash benefits, in most cases, to your heirs after your death. This cash (known as the death benefit) can help to replace your income and can secure your family’s financial needs.
Is whole life insurance right for you? Typically, Whole Life Insurance has premiums that remain fixed for the life of the policy. A part of the premium is used to accumulate a guaranteed cash value thus adding a savings element. Dividends, which are not guaranteed, may also increase policy cash value. The policy remains in force during the insured’s entire lifetime, provided premiums are paid as specified in the policy.
Term insurance is, as it suggests, for a given term. Usually 10, 15, 20 and 30 year terms are available. As you get older the companies will only write policies with shorter terms. The death benefit will disappear when your term expires, or if you renew will increase dramatically. While term insurance provides excellent savings benefits for a short period of time, it is not a long-term solution. The lost opportunity costs and potential loss of the death benefit are the main vulnerabilities.
When deciding between whole-life and term you have to ask yourself if you want to rent or own? With term you are renting and with whole-life you own. While many insurance agents only talk about the death benefit, they seldom ever discuss how many death claims are actually paid on term insurance. This is the biggest reason why term insurance is cheap.
Permanent or whole life insurance can also provide a living benefit. Part of your premium goes into a cash reserve and accumulates tax-deferred. You can generally access this cash reserve at any time for many purposes including critical illness or loans. It can also be used for many other needs like education expenses and retirement income.
Bottom line, whole-life insurance will be there for you and your family for your entire life, as long as premiums are paid. When considering Life Insurance, speak to a professional and make sure you consider things like retirement, taxes, inflation and your estate.
Written by: Barry Page, RFC
Barry Page is an independent, licensed life insurance agent and registered financial consultant. He consults with families and businesses to help them protect their assets and create wealth.
To learn more about life insurance please visit www.legacyinsuranceagency.com
