Life insurance is what responsible people who plan and think ahead buy, when they love someone and they want them provided for if they die prematurely. It's bread and butter and self-respect. Life insurance pays a lump-sum, 100% income tax-free so that the people you are responsible for can maintain the quality of life you want them to have. It helps them to pay off the mortgage or rent, or even buy a home outright, skipping the lending process entirely. Or it can at least provide them a buffer, buying them time to make mortgage payments so the home can be sold for its true value, not at a panic discount. It can fund your children's education, wipe out other debts such as car payments, school loans, or credit card bills and pay for basic final expenses like burial/crematory costs or medical bills left for the estate. Life insurance is tax-free CASH when it is needed most so people can mourn without thinking about money problems, and ultimately help them to get on with their lives.
Life Insurance is extremely affordable, so there are no excuses if you love your family. Everyone's situation is unique and we can help you with customized planning to figure out what is best for you and your family and situation.
Group Term Life Insurance is great to have, but just think of it as EXTRA, gravy, never as your #1 primary source of protection. Just because you may have some life insurance, or long or short term disability for that matter, does not mean you have the right kind, or ENOUGH.
What type of life insurance makes sense? Term Life, Whole Life, Universal or Indexed Universal Life?
A lot of this will come down to a number of things:
There are two main camps, or types, TEMPORARY and PERMANENT:
"Term Life" is the most reasonably priced and is used for temporary needs such as paying off a mortgage in X amount of years, or cars, or sending your children to school. Term lasts a specific set of years, like 10, 15, or years, then comes to an end.
"Permanent Life" comes in a variety of flavors such as Whole Life, Universal Life, and the most popular, Indexed Universal Life. These plans are designed to provide a long term death benefit for your entire life. In addition, they can build significant living benefits, cash values, or equity, you can use while alive on a very tax-advantaged basis.
In addition to making sure you are getting the right "type" of life insurance, because this is hopefully a long term venture, you also want to make sure the company you are going with is is extremely strong with the best "A" ratings for things like financial strength and claims paying ability. You want one with a high "Comdex Rating" and ratings through the main third party rating agencies such as Standard & Poors, Moody's, Fitch and AM Best.
Term Life Insurance is the simplest, most basic, least complicated least expensive, type of policy to start. It is pure efficient level death benefit protection with a level premium guaranteed for a specified period of time, like 10, 15, 20 or 30 years. It does not build cash value, savings or equity It's great when you have a need for a lot of protection and you're on a tight budget. It is good for temporary needs, like paying off a mortgage, or protecting children when they are at home.
Whole Life Insurance is the world of GUARANTEES and is the most traditional, oldest, original type of "permanent" cash value insurance. Whole Life policies are a good choice for people with a reliable fixed stable source of income who want zero to very little risk with lots of guarantees including a fixed premium that can't go up and a guaranteed cash value, no matter what the market does.
Universal Life or (UL) is a type of "Permanent Life Insurance," that is really known for it FLEXIBILITY; you can increase or decrease your premium payments depending on your current situation. Business owners and those with fluctuating income love this feature. UL somewhat of a hybrid between Whole Life and Term Life. Universal Life is great for people who just simply really want long term protection, but aren’t at an age or financial position to want to or be able to use permanent life insurance policy as a way to build equity, savings, cash value.
INDEXED Universal Life Insurance or (IUL) is by far, the most popular type of “Permanent Life Insurance” today that really emphasizes a way to build equity, savings, cash value, in addition to providing long term death benefit protection. IUL policies are an excellent choice for someone who wants to build up a cash value savings on a tax-advantaged basis, with more opportunity for aggressive upside saving cash value growth than a Whole Life policy, but with guarantees against downside market loss, in addition to the desire for a long term tax-free death benefit that lasts.
Unlike other investments such as stocks, bonds and mutual funds or even real estate, Cash Value policies like Indexed Universal Life and Fixed Indexed Annuities "LOCK-IN GAINS," and cannot go back down - even if the market does. Also - all new gains START at the last locked-in position, NOT from the bottom, trying to play catch up. Why is this important?
With Fixed Indexed products, such as Fixed Indexed Universal Life, or Fixed Indexed Annuities, this is NEVER a problem. The fact you can capture the upside gains of a stock index like the S&P 500, but without any of the downside market risk is a HUGE part of their appeal.