While the need for Life Insurance varies, the biggest reason people buy Life Insurance is to protect one’s family from the financial loss that occurs due to a premature death. Some common uses for the funds provided by a Personal Life Insurance policy are:
- To replace the income of a wage earner
- To pay-off a mortgage and other debts
- To provide educational funds for surviving children
- To fulfill the financial obligations of child support and/or a divorce decree
There are two primary types of life insurance policies:
Term life insurance covers you for a finite period of time—such as 10, 20 or 30 years. It is the least costly of the plans because the death benefit will remunerate only if you die within the term covered in the contract. It is the option most often used to meet short-term needs. Typically, the premium is guaranteed to remain fixed for the period selected. Subsequently, the premium will increase significantly each year following the Term policy limit. Most Term policies include the option to convert the policy to permanent insurance within the initial term period.
Whole Life policies provide death benefit protection for a lifetime, with guaranteed premiums and accrued cash value. In most policies, the premium is level and payable for the life of the contract — but some offer higher premiums for a shorter period of time. Universal Life also offers coverage for long-range goals while providing flexibility in the premium and the death benefit. Guaranteed Universal Life (GUL) policies are often regarded as an extended term policy, guaranteeing the premium and death benefit to whatever age desired but providing little or no cash value.
Owens Group represents the top Life Insurance carriers, and will help to educate you regarding different coverage types and policies.
Survivorship (Second to Die)
Survivorship Life Insurance is often included as part of an estate planning strategy. This type of coverage insures two lives but pays the death benefit upon the second death. As a result, it is sometimes referred to as “Second-to-Die” life insurance. These policies can be written as Universal Life or Whole Life insurance.
Regardless of the policy type, there are optional riders available that you may want to consider. Examples of these riders include Waiver of Premium and Accidental Death Benefit. Many of today’s policies also include a Living Benefit rider, at no additional premium, which will allow you to access part of the policy’s death benefit if you are diagnosed as terminally ill.
Owens Group can assist with this discussion and provide solutions to determine what coverage is right for you.