Life Insurance Is for You and Those You Love
What if the unthinkable happened and you passed away unexpectedly or prematurely? There is no way to replace you. However, life insurance can replace your future economic value and earning potential that might otherwise be lost forever. It has been said that life insurance is there not because people are going to die, but because other people are going to live!
People need life insurance for a variety of reasons, such as:
- to pay for final expenses such as funeral expenses and unpaid medical bills
- to pay off existing debts like credit cards, college and other loans
- to pay off a mortgage or provide a rent fund so that survivors have a place to live
- to provide an emergency fund for survivors to access in a time of urgent need
- to provide a monthly income to surviving family members
- to provide a guaranteed college education fund
- to provide estate liquidity so that real estate and other assets won’t have to be sold
- many other special needs or bequests that are important to you
How much Life Insurance Do People Need?
The answer to that question is unique to each person, as every situation is different. It’s truly based on what you want and need to accomplish and what your specific needs and objectives are. You can start by looking at the above 8 bullets to determine what your needs and goals might be for each category. Also, staff members at Association Benefit Services can be most helpful in assisting you to determine your needs and answering questions.
What Type of Life Insurance Is Best for Me?
Again, there is no absolute answer that is right for every person. It depends on several factors, including the amount of the need, whether the needs are temporary or permanent, and your budget. What is important to remember is that the younger you purchase your life insurance, the lower the premiums will be. Here is a quick overview of the general types of life insurance. Please keep in mind that some plans are made up of combinations or hybrid types of plans.
Term insurance is considered pure protection and runs for a certain number of years, generally 10, 20, or 30. It is the simplest type to understand. Term can usually provide the highest amount of coverage for the lowest premium. It can give the the highest amount of protection at a time when you need it the most, which is when you are younger to middle age and have dependents, debts, a mortgage, and other significant needs. The challenge with term insurance is that it expires at the end of the term period. Term insurance becomes very expensive at older ages and is generally not available for purchase in most states beyond age 70 or 75. Most term insurance does have a Convertibility Provision, which allows you to convert some or all of your term into a permanent plan like Universal or Whole Life (see below) without having to show evidence of insurability. Keep in mind, however, that if you wait too long to convert your term insurance to permanent insurance that it could be very costly. The conversion is always done at your attained (current) age.
Universal life is considered to be a permanent form of life insurance – one that can run for your entire lifetime. Universal Life has the ability to accumulate cash value and also has a guaranteed minimum interest rate which is part of the policy. People should consider buying Universal Life if they want to have a form of permanent insurance and most people should have some permanent coverage. In addition, a very important key to Universal Life is that it is considered to be “flexible”. This means that the premium can be flexible. While this is considered a very attractive attribute, you must make sure that the premium is funded adequately enough throughout the life of the policy so that it doesn’t lapse late in life. Most people that buy Universal Life, in addition to wanting their insurance to be permanent, will have an objective of either having the death benefit be guaranteed to a certain age, accumulating a significant cash value or both.
Whole Life is another form of permanent life insurance. While not quite as flexible as Universal Life, it offers guaranteed cash values and a guaranteed death benefit as long as premiums are paid on time. Some companies (mutual or mutual holding companies) also pay dividends on these policies. While the dividends are not guaranteed, they can significantly enhance both the policy’s cash value and death benefit. Whole Life has been an effective way to provide permanent life insurance for generations.
RID Members have a variety of different Life Insurance plans available to them through a network of highly competitive and reputable companies. Coverage is available for members, spouses and children. In most cases you can apply for coverage on a simplified issue basis for up to $250,000 of coverage without an exam, bloodwork or other additional requirements. This is dependent on age, health history and amount of coverage. Amounts above $250,000 will usually have some additional underwriting requirements.
The important thing is to get the coverage that meets both your needs and objectives and that fits your budget. Association Benefit Services will help you to do just that.
RID Relationship Manager
Association Benefit Services