Life Insurance Simplified

Do you have Life Insurance?  Do you wonder why you need Life Insurance?

There are so many misconceptions about Life Insurance.  As an agent I’ve heard so many strange things.  “I don’t want her to benefit from my death.”  “I don’t have anything so why would I need it?”  “I’m young and healthy.  Why would I need Life Insurance?”  “That’s for people with kids.”  “It’s a rip off.” 

All those reasons are sad and untrue.

Do you have family that will miss you if you die?  Do you have a way to pay for your funeral so they don’t have to?  Do you have credit card debt, student loan debt, a car or house payment? Are you aware that Life Insurance can be used as part of your retirement planning?  Do you ever drive on a freeway, fly in an airplane, ride a horse, hike or rock climb, cross a street or get sick?  Are you so sure that even though you are “young and healthy” nothing will happen to you?  And that some Life Insurance policies come with long term care and/or disability benefits?

Life Insurance isn’t just about death.  It’s about life.  The quality of life of those you may leave behind, the quality of life you want to live when you retire and the quality of life you want to maintain if you are injured or very sick.

There are three kinds of Life Insurance.  Term, Whole and Universal.

Term Life Insurance is for a specific amount of death benefit over a specific period of time.  For example $100,000 paid for over ten years.  This is the least expensive however at the end of the term you must reapply and the price will be higher.  Remember the younger you are the less expensive life insurance will be.

Whole Life Insurance is paid for over your entire lifetime up to retirement age.  It “matures” at age 100, 120 or upon your death.  In most cases the “face value” received is not taxable.  It will be considered part of your estate.

Universal Life Insurance is not just a Life Insurance with a death benefit but also an investment account.  The more you put into it above the base line of the premium the faster it will grow.  Very much like a mutual fund.  If you die your beneficiaries receive the face value and the investment.  If you retire you can withdraw the investment portion tax free because you are “borrowing against” the life insurance policy. 

Each of these is important depending on your particular situation.  It is important to analyze not just your current situation but the direction your future is going as well.   How much you need depends on your assets and debts. 

Contributed by Victoria Sutherland, Licensed Insurance Agent