Personal Life Insurance
Personal life insurance has been used as an effective tool to absorb the economic disaster that can come from a tragic and unexpected death. Over the years, life insurance has evolved from a means of financial compensation in the event of death, to a powerful vehicle for providing benefits while living.
Frequently Asked Questions
Permanent or Term Personal Life Insurance?
The perm or term debate can only be solved on an individual basis. “Buy term and invest the difference” doesn’t always work out for everyone.
If there is a certain death benefit need, and a very limited budget, term insurance can provide that financial protection for the stated number of years in a cost effective manner.
If someone wanted tax deferred growth of cash value, tax advantaged distributions, and a guarnateed death benefit (provided the policy has been sufficiently funded), a permanent policy may be more appropriate.
May times, the client will choose a blend of the two…buying as much permanent insurance as their budget allows, while getting the remaining necessary death benefit through term insurance. Then as budget allows over time, small portions of the term insurance is converted into permanent.
How much life insurance do I need?
There is no simple answer for everyone when purchasing personal life insurance. What future costs would you like taken care of in the event of a premature death?
- Credit card debt and student loans
- Children’s education
- Income replacement
- How many years?
What are living benefits?
Living benefits are options that some insurance carriers provide in their policies (some at a cost, others at no additional cost), that can provide benefits in life.
Many have Accelerated Death Benefit Riders that allow the policy owner to get access to a portion of the death benefit to pay for medical bills in the event of a qualifying illness or injury.
It has been estimated that the average 2018 couple in retirement will spend over $250,000 on medical bills during retirement*, and that 2/3 will require costly extended stays in hospitals at some time.
These Accelerated Death Benefit Riders can mean the differnce between a comfortable retirement and poverty in advanced age.
How can I get tax advantaged distributions in retirement?
If a permanent life insurance policy is structured and funded correctly, the policy owner can take tax advantaged distributions from the cash value to supplement retirement income.
The policy owner takes out annual distributions in the form of “loans” that are not taxed.
If structured correctly, when the policy owner passes, the death benefit pays back the loan and the remainder is paid to the beneficaries.
This is a primary method for developing a lower tax liability on retirement income as the loans are not taxed.
Get Started Today
To discuss your personal life insurance options, schedule a free 15 minute phone consultation. There is absolutely no obligation to purchase life insurance. We will simply discuss what options may be best for your consideration.