Life and financial
PLAN FOR THE FUTURE
Life insurance is often thought of as a simple plan where the insured pays monthly and a beneficiary receives money after they die. Much like everything else in life, it is not as simple as it first appears. There are many different types of life insurance policies that act in many different ways. Some policies act as financial protection for the survivors of the deceased, so they are not overwhelmed by funeral costs and loss of family income. Other policies act more like investments, focusing on a long-term investment strategy to increase financial value over time. Either way, it is best to speak to a professional in detail before selecting a plan.
Term Insurance
Term Life Insurance can be most easily understood as a life insurance policy that is only valid for a set number of years. For some, it is a great way to protect a family against financial ruin if the primary breadwinner of the family passes, leaving an income gap. When the pre-set term ends, an additional term can be added at a higher premium, lengthening the coverage period.
- A very affordable option of protection
- Often used to cover specific costs, such as children’s education or mortgage
- Premiums may increase during the length of the term, so pay close attention to the contract before signing
- Lower coverage amounts and terms may not require a health exam for approval
Whole Life Insurance
Unlike Term insurance, as the name implies, Whole Life Insurance is designed to cover the whole lifespan of the insured. Whole Life plans can be viewed as part of a retirement plan, as the benefits can be withdrawn before the insured is still living. These plans are often guaranteed premiums, cash value and death benefits.
- Premium rates can be locked in, so payments stay the same each year regardless of changes in health and age
- Some plans offer coverage as long as to age 121 years old
- Investments into Whole Life plans are tax-deferred and can be borrowed against
Universal Life Insurance
Universal Life is designed to act as a flexible term life policy, allowing you to build a policy’s tax-deferred cash value and set a specific term length.
- As your cash investments change, you can modify your premium payments and planned death benefits
Long-Term Care Insurance
The costs of a quality long term care facility can be quite high, but policies like Long-Term Care Insurance can help fill in the financial gaps between health insurance and Medicare/Medicaid
- Benefits can include part-time or full-time home care, assisted living, adult daycare, respite care, nursing home, and hospice care
- Premiums paid toward the policy are often tax deductible
Annuities
Annuities, or Life Annuity, is an insurance policy that acts more as an alternative savings account that can be withdrawn from at a set future date. Annuities can be funded in a single lump payment, or a series of regular payments. This policy type can be purchased to safely fund retirement.
- Investments or premiums are tax-deferred
- Annuities offer higher rates than typical CDs and savings accounts and are guaranteed, unlike stocks
- Some policies include a life insurance component that provides a death benefits to a beneficiary
Disability Insurance
Disability, or Income Protection insurance protects the insured from the financial risk of onset disability that may prevent them from working and collecting an income for a period of time. Policies can be for a few days, weeks, months or long term. Disabilities covered may include physical injury, psychological disorder,
or illness.
- Though it is most common for employers to offer disability insurance as part of their benefits, individual plans are available
- Plans can cover up to 65% of lost income
- Workers Compensation is a form of disability insurance, but the policy only applies to on-the-job injuries
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