Many people view life insurance simply as a “death-benefit,” a way to protect their family and loved ones in case they were to pass away. Upon a closer look, however, you’ll discover that there is a world of potential uses and strategies for life insurance that go far beyond the traditional approach.
The primary feature of life insurance, the death benefit, isn’t for those who have died—it’s for those who are left behind. When shopping for life insurance, consider needs such as replacing income so your family can maintain its standard of living, as well as paying for your funeral and estate costs. As a rule of thumb, you should seek coverage between five and seven times your gross annual income. As far as the various types of policies go, they can generally be placed into one of two categories: Term and Permanent. It’s important to understand the differences between them to find what’s best for you.
Life Insurance Details:
- Life insurance provides a tax-free death benefit to your heirs if you were to pass away
- Other than the death benefit, life insurance can also be used for tax-free retirement income
- There are a variety of different types of life insurance. Each have different pros and cons
- Life insurance provides you with peace of mind that your family will be well taken care of
- There are a range of flexible payment options available to all budget and asset levels
- As you age, premiums can become more expensive
- Policies can be complex and difficult to understand; your financial advisor can help guide you
- Depending upon your health and medical history, you may not be eligible for coverage due to underwriting
While many people don’t like talking about or thinking about life insurance, it’s important to discuss nevertheless. Life insurance can truly be a valuable tool and strategy with your financial planning. If you’ve got an older policy that needs to be reviewed, or are thinking about life insurance for the very first time, let’s get together and talk.
Keep in mind that most life insurance policies require health underwriting and, in some cases, financial underwriting.