Life Insurance has been around for thousands of years serving the same purpose throughout history, protecting the surviving family members, and business interests. Life Insurance has been, and currently being debated as a necessity or nonessential for financial planning. The non-believers say you can take the premiums and invest in the stock market outperforming the death benefit your survivor receives from a Life Insurance policy. Obviously, we believe that everyone should have a Life Insurance program that fits their needs.

The Three Main Types of Life Insurance

Term Insurance

Term Life Insurance simply provides a death benefit for either a 10, 15, 20, or 30-year period. The benefit of Term Life Insurance is it provides a low-cost option for death benefit protection. The negative would be the premium increases substantially after the “term” ends. This would be a good solution to cover short-term debts such as car loans, mortgages, or lines of credit. It also provides income replacement so the survivors can continue their lifestyles.

Whole Life

Whole Life Insurance provides a permanent death benefit, level premiums, and cash value accumulation. Whole Life Insurance costs more than Term insurance since the coverage will never end if policy premiums are being paid. The benefits of Whole Life Insurance are level premiums that never increase, a permanent death benefit, and a potential for cash to build inside your policy. The negative is the cost will be higher than Term Life Insurance.

Universal Life Insurance

Universal Life Insurance is almost a combination of Term Life & Whole Life Insurance. The benefits of Universal Life Insurance are the potential for cash accumulation, a permanent death benefit (if policy funded correctly), level premiums, and is less expensive than Whole Life Insurance. The negative is there is no “guarantee” of a death benefit, or cash accumulation as these policies typically rely on an index, or interest rate performance.

Frequently Asked Questions about Life Insurance

This will depend on what your needs and goals are. If you are only concerned about paying off short-term debts, and income replacement resulting from an untimely death, you may just want a Term Life Insurance policy. Whole Life Insurance policies are good for “burial” policies, and can be quite effective programs for children. Universal Life Insurance if funded properly, can provide permanent death benefit protection, and cash accumulation for possibly supplementing retirement programs. The bottom line is to select a plan that fits your needs, and comfortable with.

We recommend working with a local insurance agent only. Online Life Insurance Carriers rarely provide you with a Life Insurance Needs Analysis to determine what type of coverage, and how much you should have. Many times, when we work with clients that have Life Insurance they can’t explain why they selected a certain benefit amount, or if it would be enough for their survivors. We also suggest working with an agent that will provide annual reviews of your plan so adjustments can be made based on your changing needs. The most important aspect is to just simply have Life Insurance! Remember this is not a decision to benefit yourself, this a decision that will impact your survivor’s lives moving forward.