When most people think about life insurance, they usually think about the money needed to cover their funeral expenses. While it is important to have coverage for your final expenses, life insurance can do so much more. With the proper life insurance policy, you can help secure your family’s financial future.
Thinking about our death can be difficult, but you are a financial provider for your family, and considering what they would need when you are no longer here is critical. In addition to covering final expenses, a well-planned policy can ensure your loved ones will not be strapped with the burden of the loss of your income. Click To TweetWhile a life insurance policy can support your family, it can also be used to meet the changing needs of your own life including security in retirement.
Sound interesting? Let’s discuss some options that are available and how they can go beyond just covering your funeral.
Essentially, there are two main types of life insurance, term and whole life. An easy way to look at term life insurance is to think of your home or auto insurance. You pay a monthly premium for a set amount of coverage, but it does nothing for you unless your home or car is damaged. A term life policy is the same. You pay monthly premiums for a set amount of coverage and will not be paid out unless you die unexpectedly during the coverage period. This type of policy has no cash value.
With a whole life policy, your beneficiaries will be paid should you pass away, but the policy also has cash value like a savings account. You select the coverage amount, like a term policy, and you pay towards the policy value. So you get two benefits for the price of one; coverage for your family if needed but also an additional investment in your own future.
There are pros and cons to both types of policies. Term life insurance is much less expensive than whole life. It can be easy to afford a large policy using term life. This helps to cover a loss of income, final expenses, and any other debt you may leave behind. It’s an easy way to leave your beneficiaries a nice inheritance with little investment on your part. One of the detriments of term life insurance, however, is it will expire. As the name suggests, it only covers you for a set term. Depending on your age when the policy expires, a new policy may be much more expensive.
Whole life insurance offers security for as long as you require it and the policy increases in cash value with each passing year. Not only can this type of policy cover your family in an untimely passing, but it can also give you financial security later in life. As your policy grows, you can tap into the cash value. This can be used for college expenses, medical expenses, an unexpected financial hardship, and even toward retirement. Having financial support in your retirement is crucial on a fixed income and a whole life policy can be your savings to enjoy during your golden years.
Many utilize both term and whole life policies. While still working, some people will carry both a term and a whole life policy. This allows you to have security for your family now while still keeping an eye on the future. Some employers offer life insurance policies as part of a benefit package. Often, while generous, the policies will not cover the full needs of your family’s financial security. It is best to sit down with an agent to create a tailor-made plan for you and your family’s needs.
In all, life insurance is peace of mind. You can rest easy knowing that no matter what comes in life, you and your family are secure.
So what policy is right for you and for your estate planning needs? Contact us today.