Written by Emily Bollinger Miller
Thinking about life insurance can be daunting. Mustering the courage to call and talk to a professional can be intimidating. Moving forward with the process, can seem overwhelming. Afterall, who likes needles, stepping on a scale and discussing your own mortality?
Life Insurance is an important part of the financial planning process for any individual or family. Think of it as a slice of the pie – an important part – that can be used to protect your family’s estate, business interests and provide for a secure financial future.
Two Examples of Basic Types of Insurance Are:
Term Insurance and Whole Life Insurance. Either or both may be important in an appropriate plan for you and your family.
A Term Life Insurance Policy provides the security of a stated death benefit in exchange for a guaranteed premium paid for a set number of years. Once the policy is issued, the insurance company promises to keep the premium the same during the duration of the term period. A term period can range from 10- 30 years.
A term policy is typically more affordable and can provide simple planning to cover debts such as a mortgage on a home and/or student loans. When the term limit expires, the premium is then adjusted to reflect the age of the individual at that time. The increase is typically severe and will prompt most policyholders to pursue alternative options of coverage. A term policy will not generate a financial return if the person survives the term limit and coverage expires.
Alternatively, a Whole Life Policy provides a permanent option of coverage and is guaranteed to pay the death benefit to a beneficiary or cash value to a policyowner. Like a term policy, once the policy is issued, the company guarantees to keep the premium consistent. The whole life policy will build cash value and often provide the owner with term and paid-up conversion options for consideration. The whole life policy tends to be more expensive and additional riders and benefits can be added to accomplish the goals of the policy owner. There is more flexibility in payment plans and options to consider based on your financial goals.
In my humble opinion, any life insurance is better than no life insurance. Take the time to chat with a trusted advisor, whether insurance or financial, and work together to design a budget friendly plan that can help you to achieve your goals.
