Life Insurance Basics

Who needs life insurance?

There are lots of things to consider when trying to determine the right type of life insurance coverage to protect yourself and your loved ones.

Life insurance in general falls into two basic categories, personal and business life insurance.

Personal Life Insurance

In its simplest form is used primarily to pay off outstanding debt at the death of the insured.  This can include but is not limited to the following…

• Payoff of mortgages and loans so surviving family members can maintain the lifestyle they have been accustomed to.
• Providing a source of funds for future college expenditures for surviving children.
• Funds that provide income for the surviving spouse.
• Burial expenses
• Charities

Business Life Insurance

Business owners use life insurance for many different reasons. They include…

• Buy Sale: When there are 2 or more owners of a business a policy sometimes referred to as a Buy-Sale Policy is used. This type of policy provides funds in the event of the death of one of the owners so the remaining owner can purchase from the heirs of decedents their portion of the business.
• Key employee: When a business owner feels that a certain employee is so valuable to the business that if that employee was to die it would bring financial stress to the business a business owner may purchase a life insurance policy on that employee. This type of policy is referred to as a Key Employee Policy.

What are the different types of life insurance

There are basically two different types of personal life insurance.

• Whole Life or Permanent Life Insurance
• Term Life Insurance

Whole Life or Permanent Life Insurance:

Insurance coverage that has a premium that remains the same throughout the policy period. The policy remains in effect throughout the whole life as long as premiums are paid. This policy also builds cash value over time.

Term life insurance:

Insurance that has significantly lower premiums in the early years but increase over time, typically every 10, 15, or 20 years. This type of life insurance is suitable anytime a larger amount of life insurance is needed for a specific period of time, or where affordability is a concern.

Life insurance rates vary based on your age, health, and other elements. As you age, the premium cost will increases with term life insurance. If you choose whole life insurance, you will have a higher premium initially, but it will remain the same over time.

There are many factors that affect how much life insurance you should buy.

• Is your loved ones dependent upon your income while you are alive?  If so,  you will need to calculate how much life insurance will be needed to replace your income.
• If you have unpaid debts, such as credit cards and auto loans you will need life insurance to pay those, as well.
• Your burial costs should be covered by life insurance.
• If you have children, you may want to guarantee that they will have funds available for college.
• Do you have a home mortgage? Buy purchasing life insurance you can rest assured that your family will be able to continue with the lifestyle they’ve grown accustomed to.

Give us a call , or use our life insurance quote engine to the right.  Call us if you are not sure of your rate classification.  We will do everything possible to assist you with your insurance questions or purchase.