Two things in life that are certain – Death and Taxes! Unfortunately, death for the most part cannot be predicted, but planning for death should be one of the foundation bricks of your long-term financial planning!
Life Insurance is a very simple concept – you buy an insurance policy that promises to pay your beneficiary or beneficiaries the amount of benefit you purchased when you die! Proper financial planning should include a solid Life Insurance policy that could protect your family and loved ones from the difficulties of maintaining a stable and secure lifestyle in the event of a premature or unexpected passing. Life insurance can help create financial security for you and your family as it can be used to:
- Pay final expenses and any debts
- Provide an income for your family
- Ensure your family has the resources to maintain a comfortable standard of living
- Assist you in transferring wealth
- Assist you in estate planning
- Assist you in achieving estate tax liquidity
- Leave your desired contribution to a favorite charity
While you’re still living, some life insurance policies can:
- Build tax-advantaged savings you can draw upon as needed for personal or business opportunities
- Supplement your retirement income or provide for long-term care or home care for yourself or a family member
Life Insurance is a product that you can buy a lot of or not very much of, depending upon your own individual circumstances. It is also unique in that you can pay a lot or a little for basically the same death benefit all dependent upon the type of plan that you choose. Keep in mind however, that the younger and healthier you are the less you will pay for your coverage!
So how much Life Insurance do you need?
The answer to that question depends upon many benchmarks all relevant as to why you are buying the insurance in the first place. However, one common benchmark that revolves around Family Protection says that your death benefit should be about six to eight times your annual earnings. Other factors to consider would be:
- Other sources of income that you may have that will continue after your death
- The size of your family
- Whether your spouse works and his or her earning capacity now and in the future
- The number of people financially dependent upon you including spouse, children, elderly parents, non-custodial children etc.
- How long will people who are financially dependent upon you remain dependent upon you
- Other death benefits your family will receive from Government programs, employment policies or other policies you may already have in place
- All debt requirements such as Mortgages, loans, college education
The best piece of advice that we can give you is, that whatever type of policy you decide to buy, make sure it provides enough of a death benefit to meet your family’s needs and never lose sight of this number!
Term Life Insurance
Term Life Insurance is Life Insurance which provides coverage at a fixed rate of payments for a specified and limited period of time. Term Insurance is the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis over a specific period of time. Click here to read more.
Permanent Life Insurance
In actuality, there are only two main types of life insurance – Term and Permanent Life Insurance. You will find that many people become confused between “Permanent Life Insurance” and “Whole Life Insurance” as many times they are incorrectly interchanged. Click here to read more.
Universal Life Insurance
The purpose of Universal Life Insurance is two-fold. First and foremost, Universal Life Insurance is an insurance product designed to help you take care of your beneficiaries by providing them with financial support and long-term insurance protection to help safeguard the legacy you’re building for them. It also gives you the opportunity to invest and build additional wealth over time, within the same policy. Plus, the added advantage is that it gives you an opportunity to invest and build additional wealth over time – tax free! Click here to read more.