While often overlooked, life and disability insurance can be one of the most important forms of protection needed for an individual, a family, or even a company. There are many types of insurance available, and MRG of GA agents are poised to assist you with satisfying the specific needs for your future.
There are many types of life insurance available which offer protection for the insured and/or their families. Amounts of coverage, types of coverage, reasons for having coverage, and costs are major factors in determining the when and why you should purchase life insurance as well as what type of insurance policy you should consider.
Many people don’t realize the benefit of purchasing life insurance at a young age, depending on the type of insurance policy chosen. While the “family” responsibilities have yet to surface, chances are a young adult will eventually find a partner or spouse, in many cases they will have children and form a family, and in the later years there may be a substantial estate which may be impacted by estate taxes. While these future events are often “out of sight and out of mimd”, purchasing whole life insurance policies can be a wise decision as a young adult. Why? Because premiums payments are generally the lowest costs due to the good health and projected longevity of life of the individual.
Many individuals realize they need life insurance when they form a family. When a couple gets married, in many cases the lifestyles of the couple are chosen based on then income generated by the couple. Fixed expenses and debt can range from the basic needs requirements such as food and utilities up to larger expenses/debt such as automobiles and mortgages. It one of the spouses dies, the surviving spouse may be put in a difficult financial situation during one of the toughest times in their lives. Purchasing a life insurance policy to cover those financial requirements is an important decision when dual responsibilities fall upon the surviving spouse as a result of death.
When a couple has children, life insurance is as important as ever before. This is the most common time when an individual (or couple) purchases life insurance. The financial protection needed for supporting children long enough to become self-sufficient is probably the most critical time for purchasing a life insurance policy, and rightfully so. Lost wages are just one of the factors which need to be determined when a child/children are born. When a spouse is left behind to raise the family, new expenses may arise including day care, counseling, education expenses to improve careers … just to name a few. Determining the face value and amount of life insurance needed during this important phase of life requires wise planning and understanding of the needs your family will face in the years to come.
As individuals age, the need for long-term protection reduces due to life expectancy; however, purchasing life insurance during the latter years of life can still be a wise choice in many cases. Individuals approaching or during retirement are in most cases not physically able to continue to work during the golden years. If retirement financial portfolios did not reach levels large enough to support you, your spouse, or your family members for the (hopefully} decades to come, the opportunities to generate enough income to cover living expenses are reduced dramatically due to physical limitations. Albeit late in the game, an insurance policy may be one of the only ways to provide income for covering your spouses living expenses for the remainder of their life. Note: In these cases, careful attention needs to be taken to weigh the risk/reward of life insurance in older age individuals due to the high costs of premiums for the aged. Our agents will help you assess these factors to give you an honest and fair assessment of those needs…. knowing that life insurance may not be a wise choice at this point in life.
Another reason for considering life insurance in the latter years is part of estate planning. When insured dies and the beneficiary ( the person who is designated to receive the insurance proceeds upon death) is not a surviving spouse, the value of the deceased estate is often subject to inheritance taxes. Estate taxes can be a substantial percentage of total estate, especially if wise planning has not been utilized to protect these assets for surviving family members. In many cases, life insurance can be used as an effective means of paying the inheritance taxes. Once again, our experienced agents combined with financial planners and attorneys may be able to assist you in choosing the best way to preserve your assets or remove the financial burden on your beneficiaries.
For example, suppose you own a million-dollar parcel of land which has remained in the family for generations. Upon your death, this asset will be subject to inheritance taxation. If you don’t have enough liquid assets (easily obtained cash), your children and/or other beneficiaries may be forced to sell part of the land just to pay the estate taxes. If you had enough life insurance proceeds to cover the inheritance taxes (and possibly future years of property taxes), the sale of the land could be avoided.
Let us help you determine your life insurance needs whether you’re young, old, married, single, wealthy, or under-funded.
There are two main categories of life insurance … whole life and term. While there are many variations of each, the falling information gives you a general idea of both categories.
As the name implies, whole life insurance provides a death benefit for your entire life (generally up to 100 years old max). This type of insurance generally provides a stated face value (death benefit) for your entire life, and part of the premium payments are used to provide a savings vehicle during the life of the policy called cash value. The cash value increases over time, and in many cases the value grows tax free depending on the type of whole life policy you choose.
Additionally, the cash value can be borrowed during the life of the policy for specific needs including but not limited to child’s education expenses, emergency medical expenses, etc. Any cash surrender amounts must be paid back with interest, or the amount is deducted from the face (death benefit) if not paid up upon death. Other uses include using the interest gained on cash value to purchase additional insurance or help pay premiums during the latter years when you don’t have sources of income to make the premium payments.
Note: Whole life policies generally mature at age 100, so when you are fortunate enough to live to 100, you get a check for the face value plus any accrued interest (or less any policy loans) when you reach the century mark.
One of the most basic forms of whole life insurance is FINAL EXPENSE INSURANCE – At the most basic level, final expenses are incurred upon the death of an individual. Upon death, someone is responsible for the costs whether it be the estate of the deceased or a family member. Having an adequate amount of insurance (face value) is essential to removing this financial burden from those who survive. Our agency can help you determine the amount of coverage needed, and find you an affordable insurance policy to cover these most basic needs of insurance. Items to consider when determining the face value amount of final expense insurance include burial costs, funeral processions, memorial monuments, burial plots, or crematory services.
Term life is quite different from whole life insurance. Term insurance offers a much lower premium level than whole life, but the policy period is generally much shorter than age 100. Wise uses of term insurance are used to provide copious amounts of insurance during times in life where substantial funds will be needed upon your death. For example, and young couple with young children would need a substantial amount of insurance to fund their spouse and children’s living expenses should the die during an early age. Term insurance most often covers periods such as 10 or 20 years. In other words, if you are age 30 and you purchase a $500.000 twenty-year term policy, the premiums can be quite affordable. If you die one day after the policy effective date (beginning date), your surviving beneficiary receives $500.000. If you die at age 49, the same benefit is paid; however, if you die at age 51 (and you did not renew or convert your policy at a most likely much higher rate), no benefit is paid upon your death. A wise and common application of purchasing term insurance is to purchase a large face value policy at reduced cost, and use the savings (from a whole life premium) to invest and grow your assets in order to have a “nest egg” large enough to cover the remaining life expenses once the policy ends.
Types of Term Life
- Annual Renewable Term (ART)
- Level Term
- Increasing Term
- Decreasing Term
- Extended Term
Note: There are many options for investing the savings from term life premiums including annuities, stocks and bonds, or mutual funds. Our agents and/or your financial advisor can provide you with several options for investing to potentially reach your goals of financial independence when the term policy ends.
There are many variations of Whole Life Insurance policies available which can be utilized to meet the needs of the individual. Below are a few examples of whole life policies:
- Straight Whole Life
- Adjustable Life
- Indexed Whole Life
- Variable Whole Life
- Enhanced Whole Life
- Joint Life
- Joint and Last Survivor Life
- Limited Pay
- Modified Whole Life
- Single Premium Whole Life
- Universal Life
Our team of licensed agents can assist you with understanding the various types of whole life insurance; and we are trained to help you find the product which best fits your needs and financial objectives. Additionally, there are provisions within insurance policies which need to be understood when choosing life insurance. We can help you understand beneficiaries, exclusions, grace periods, effective dates, premium periods, cash value utilization, and many other provisions often used in life insurance contracts.
We are full line of Health, Accident and Sickness, Life, and Disability Insurance Products. If you are interested in discussing your insurance needs with a licensed agent, please contact us.