Life insurance is what responsible people buy when they love someone and they want them financially protected. Life insurance is not a "Go Fund Me" account, where you are leaving your loved one's financial security up to the generosity of strangers. 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.
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.
At bare minimum, people normally want enough to wipe out the mortgage if you have one, and all other debt, with some money left over to help with time to adjust. The last thing grieving widows and widowers want is financial stress of any kind.
Beyond that, we concentrate on income replacement, to keep those you love, in their own world. We can't replace you and your affection, but we can provide enough money so your loved ones can continue living in the way they are accustomed, or even a little better, if that's important to you.
Income replacement can be for a set number of years, or even be designed to protect your loved ones over the rest of their life.
What kind of life insurance makes sense? Term Life, Whole Life, Universal or Indexed Universal Life?
In addition to helping you figure out how much life insurance you need, we can also help you to decide which kind makes sense. It might be one or another, or possibly a combination.
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.
Term Life Insurance is the simplest, least expensive type of policy to start. It's great when you have a need for a lot of protection and you're on a tight budget. It is generally for temporary needs, such as paying off a mortgage, or protecting children when they are at home. It coves a temporary period of time, where the premium costs are fixed, locked-in for that period of time, such as 10,15,20, or 30 years. They can be set to renew, (guaranteed renewable) at the end of the term, but the cost will be horrendously more expensive. The only people who usually exercise this are those who are terminal. Term insurance is extremely cheap. A healthy 35 year old male can buy a million dollars of 20 year term for about $60 per month, on average, depending on the policy and company. If you are healthy, and you love someone, there is simply no excuse to not at least have some Term life insurance. The risk you are running with term life insurance, if you say buy a 20 year term, is if you still end up having a need for life insurance at the end of the 20 years. You will be older so it will be more expensive, and if your health has changed, you may no longer qualify. Tell us when you are going to die, and we will tell you what kind of policy you should buy so it will be in force when you need it. One thing to keep in mind with Term Life, is if you miss your monthly premium, there is only a 30 day grace period. After that, your policy is lapsed and won't pay. If this sounds like a problem, read more on your other options, such as Universal Life, or Indexed Universal Life.
Universal Life is a type of "Permanent Life Insurance," that is known for its FLEXIBILITY. More on that later. Some people do not like the idea with Term Life Insurance, that the term of time may not last long enough. It bothers them that they could have a 15 year term life policy, have it run out, no longer qualify to get more life insurance and die in the 16th year. To address this, these buyers select a policy with a permanent death benefit, made to last as long as they do, typically to age 90, 95, 100, or literally forever, age 120. In the old days, "Whole Life" was the only option to do this. However, whole life insurance was also very expensive because it has a cash value component, that builds up a savings, and equity - it's not an option. Many people however, are not interested in this cash value. They do not want to use life insurance as a savings tool, an investment. They simply want a life insurance policy with a permanent, long-term death benefit, that doesn't run out like term life, and they want it at the lowest possible cost. Universal Life is perfect for this scenario and we broker with top "A" rated companies to help you find the right one. People also like Universal Life because it can have a very flexible premium structure. You can skip payments, reduce payments, pay more to play catch-up. Unlike Term Life policies, which only have a 30 day grace period, these policies can have a small reserve, a savings, a surplus built up that is used to keep a policy in force, from lapsing. To many people, this feature alone, is worth the price of admission.
INDEXED Universal Life Insurance has all the same benefits of Universal Life insurance, with the added benefit that it can be a very powerful and fantastic accumulation tool to save money for retirement, as well as emergencies and opportunities along the way. These policies, besides having a long-term tax-free death benefit, and flexible premiums, also can create substantial cash value. Unlike Whole Life policies, which are extremely conservative, and only grow at 3-4%, and which are based on government bonds, Indexed Universal Life policies cash value growth are based on the UPSIDE gains of stock indexes such as the S&P 500, BUT without ANY of the downside market risk and volatility. Gains earned each year are "locked-in" so your values can't go down, even if the market does. Unlike real estate, stocks, bonds, mutual funds, and 401Ks, new gains recovering from a down market START from the last "locked-in" position, NOT from the bottom - just trying to play "catch up." These policies also have very unique tax advantages that allow the cash values to grow on a tax-deferred basis, but can be distributed TAX-FREE at retirement, or anywhere else along the way; There is NO 10% IRS penalty for withdrawals taken before the age of 59 1/2. Also, what if you get totally disabled? With 401Ks and other investments, your contributions will come to a screeching halt. These policies can have a disability feature, essentially premium insurance, so that your payments are made for you, with no taxable event, so your retirement plan doesn't implode simply because you are sick or hurt and can no longer afford to fund it. These policies are also allow huge premiums if you are really wanting to sock away a lot of money, unlike IRAs, Roth IRAs and 401ks. If you can swing it, and are serious about putting away money for retirement, these policies can be the ultimate savings tool for the right person.
Watch widow and mom, Alyssa Taber share how she feels about life insurance. Better have a Kleenex handy.
Check out this great video about the VALUE of life insurance - and why people buy it
Learn about life insurance protection combined with Indexed Savings by Columbus Life
Another great video by Principal Life on Indexed Universal Life
Check out this great video on ACCELERATED Death Benefits by Columbus Life