Everything You Need To Know About Life Insurance - Shinberg-LTB Insurance
September 14, 2023
Life insurance acts as a vital protective blanket for loved ones when they unexpected happens. But for many, this realization comes too late.
In a recent survey, nearly 40% of adult consumers indicated they would feel a financial impact within six months, if a primary wage earner in their family were to pass away. More than 20% would feel it within a month.* This does not need to be the reality.
The purpose of life insurance is to keep your loved one’s standard of living from diminishing. It is an important element of your financial planning. For most, the decisions involved with purchasing life insurance seem daunting and difficult to think about. You can start by assessing whether you actually need coverage.
Consider the following:
Do you have dependents that rely on your income for financial stability, including college costs for children?
Do you have a mortgage, credit card debt or outstanding loans?
Can your family members afford funeral and burial costs?
By choosing the right life insurance coverage you can cover these costs and outstanding debts. Use this life insurance calculator to determine what you may need to protect your family.
Types of Life Insurance
Once you’ve determined that you need life insurance, the next step is to choose the most appropriate type of policy. Here are the main types of life insurance:
Term life insurance provides coverage for a specific term, typically 10, 20, or 30 years. It’s often more affordable than permanent life insurance but offers no cash value. It’s suitable for individuals with temporary financial responsibilities, like a mortgage or children’s education.
Whole life insurance is a form of permanent insurance that covers you for your entire life. It combines a death benefit with a savings component that accumulates cash value over time. Premiums are generally higher, making it suitable for long-term financial goals and estate planning.
Universal life insurance is another form of permanent insurance that offers flexibility in premium payments and death benefit amounts. It also includes a cash value component that can be invested. It’s ideal for those seeking flexibility in their insurance policy.
Variable life insurance allows policyholders to invest the cash value component in various investment options, such as stocks or bonds. While it offers potential for higher returns, it also carries greater risk. This type of policy is suited for individuals with a higher risk tolerance and investment expertise.
Indexed universal life insurance combines elements of universal and variable life insurance. The cash value component is tied to a stock market index, offering potential for growth with some downside protection. It’s suitable for those looking for a balance between risk and growth potential.
When determining the life insurance policy that best suits your family’s needs, take the following factors into consideration:
Coverage: Determine the appropriate coverage amount based on your financial needs and obligations. A financial advisor can help you calculate this figure accurately.
Premiums: Assess your budget and ability to pay premiums consistently. Keep in mind that premiums can vary significantly between policy types.
Riders: Explore optional policy riders that can enhance your coverage, such as critical illness riders, disability income riders, or long-term care riders.
Underwriting: Understand the underwriting process, which assesses your health and lifestyle to determine your premium rates. Your age, health, and habits, such as smoking or risky activities, can impact your premiums.
Beneficiary: Carefully designate beneficiaries, ensuring they align with your wishes and financial goals.
Review Periodically: Insurance needs can change over time due to major life events like marriage, divorce, or the birth of children. Periodically review your policy to ensure it still meets your need.
Gifting Life Insurance: No one knows what the future holds, so purchasing life insurance for a child ensures that they have a lifetime of coverage that they may not be able to purchase as an adult due to an unexpected illness or disability. Life insurance can also be gifted to a charity in order to help preserve the future of an organization you care about. Learn more.
Different insurance carriers offer additional policies that may work best for your family, as well as discounts for multi-policy owners. Assess your financial situation, obligations, and long-term goals to determine if you need life insurance and, if so, which type best suits your needs. Seek guidance from your insurance agent to make an informed decision that ensures your financial legacy and your family’s well-being.
We are available to answer your questions and help you assess your coverage.