Life Insurance
Though life comes with many unexpected twists and turns, death comes for us all in the end. And making an important decision regarding your life insurance — and which type of life insurance — might turn out to be one of the most important decisions of all.
Life insurance is a contract between an insurer and a policyholder in which the insurer guarantees payment of a death benefit to named beneficiaries upon the death of the insured. The insurance company promises a death benefit in consideration of the payment of premium by the insured. This is often calculated with a free asset ratio.
While other kinds of insurance products offer similar kinds of premiums for benefit arrangements, life insurance is the one kind of insurance that you know for sure, without a shadow of a doubt, that there will come a day when the policy can be used. In other words, not everyone uses their medical insurance or car insurance if they’re healthy or drive safely, but in the end — we all die.
100% of Americans have a 100% chance of death at some point in their lives. So, life insurance is one kind of insurance policy that stands apart from others, in that the policyholder has a definite need for the benefits at some point in time.
Three out of five people own some type of life insurance, and another 34% report a likelihood of making a purchase within the coming year.
Your needs will depend on a number of factors, including the size of your family, the nature of your financial obligations, your career stage, and your goals. For example, when you're young, you may not have a great need for life insurance. However, as you take on more responsibilities and your family grows your need for life insurance increases.
There are many other types of life insurance policies available. The bottom line is that life insurance protection is important. It may be time to consult an insurance professional who can help you assess your life insurance needs, and offer information about the various types of policies available.
The two basic types of life insurance are term life and permanent (cash value) life. Term policies provide life insurance protection for a specific period of time. If you die during the coverage period, your beneficiary receives the policy's death benefit.
If you live to the end of the term, the policy simply terminates, unless it automatically renews for a new period. Term policies are typically available for periods of 1 to 30 years, and may, in some cases, be renewed until you reach age 95. With guaranteed level term insurance, a popular type, both the premium and the amount of coverage remain level for a specific period of time.
Permanent insurance policies offer protection for your entire life, regardless of your health, provided you pay the premium to keep the policy in force.
Many different types of cash value life insurance are available, and with so many types of life insurance available, you're sure to find a policy that meets your needs and your budget.
IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC.