What is Life Insurance and why do you need it?
What is Life Insurance?
Life insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money in exchange for a premium, upon the death of an insured person. The designated beneficiary can be any individual that the policy holder chooses and can usually be changed at any time during the life of the policy. Life insurance has living benefits too!
Why do you need it?
Life insurance is designed to protect your family or anyone who depend on you for financial support. Another significant benefit of life insurance benefits is to provide financial support for: funeral expenses, paying off a mortgage, resolving other debts, spouses, minor children, long term care, retirement, etc.
Term vs. Whole Life
Term Life
No cash value accumulation
Full death benefit paid to the beneficiary
Temporary insurance that expires when the specified period of time ends
No option to borrow from cash
Policy for a specific period of time (15, 20, 25 years or until age 65)
Whole Life
Cash value accumulation
Death benefit is paid to beneficiary less any amounts withdrawn from the cash value
Permanent insurance that expires at death
Can borrow from cash accumulation without lengthy process
Policy is generally for a lifetime (or to age 100)
How do I know how much life insurance I need?
The most efficient way to determine the amount of life insurance and/or savings you truly need to protect your family is by having a complimentary Financial Needs Analysis (FNA) conducted. An FNA will show you what you can do to save during your life insurance term so that you will be more prepared for retirement, your child's college education, mortgage protection, and your personal goals.
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