Life Insurance Policies
Life Insurance allows you to leave a legacy for your family, covers the cost of end-of-life expenses, and can eliminate debts after your passing. Although it’s strange to think about the people we will leave behind, life insurance is a gift that ensures your loved ones are taken care of.
You can set up life policies by committing to monthly payments or using a lump sum to kick off the policy. Because the pay out on a life policy is tax-free or tax-deferred and never goes through probate, it is a secure way to leave money for family members. The person receiving the pay out, also known as the beneficiary, is guaranteed the money the policyholder intended him or her to receive.
There are two primary policy types:
Whole life never expires or loses value no matter how long you have it. This is a great way to protect against financial needs that will never go away (such as loss your dependent family might feel without your income). It can also cover funeral costs, which are often more than $10,000 for the simplest ceremony. Whole life is a popular way to leave a legacy or gift on behalf of your estate. Because whole life has a cash value equivalent to equity from property or goods, you can even borrow money against the policy in a pinch.
Term policies provide coverage for a set amount of time (most commonly, between 10-30 years). This type of insurance is perfect for debts that have a set expiration date or will reduce over time, such a mortgage, student loans, or financing on a car. In the event of an untimely death, this type of insurance protects your family from getting stuck with that burden. Term life is the least expensive form of coverage, so you can choose large quantities of protection with little immediate financial impact.
Your insurance agent can help you decide which type of policy is right for you, or if a more robust variable policy might help you and your family reach your financial goals.
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