Insurance

Life Insurance

At some point in your life, you'll probably be faced with the question of whether you need life insurance. Life insurance is a way to protect your loved ones financially after you die and your income stops. The answer to whether you need life insurance depends on your personal and financial circumstances.

Understanding Term vs. Cash Value Life Insurance

Term life insurance provides life insurance coverage for a specific time period (the term). It is often referred to as pure insurance. The face amount of the policy is paid if you die during the term of the policy. When you live longer than the term of the insurance coverage, nothing is paid, as there is no cash surrender value.

Cash value, or permanent, life insurance is life insurance that is designed to be kept until your death--whenever that may be. Part of your premium pays for the "pure" insurance coverage and expenses, and the balance is held by the insurance company in a cash value account. The type of permanent life insurance you buy (e.g., whole, universal, variable) will influence the pace at which the cash value portion of your policy grows. The interest and earnings grow tax deferred until you withdraw the funds, and may be part of the income-tax-free death benefit if you die. However, these policies may require a higher cash outlay than term life policies.

Long-Term Care Insurance

Most people associate long-term care with the elderly. But it applies to the ongoing care of individuals of all ages who can no longer independently perform basic activities of daily living (ADLs)--such as bathing, dressing, or eating--due to an illness, injury, or cognitive disorder.

Disability Income Insurance

People ordinarily buy property and casualty insurance to protect their possessions (houses, cars, and furniture) and life insurance to provide income for their survivors. However, many people don't think about protecting their income with disability income insurance. But how well could you live if you weren't able to work? Disability is an unpredictable event, and if you become disabled, your ability to make a living could be restricted. Although you may have enough money in the bank to meet your short-term needs, what would happen if you were unable to work for months or even years? The real value of disability income insurance lies in its ability to protect you over the long haul.

Health Insurance

Let's face it--in today's world, health insurance is a necessity. With the cost of medical care soaring higher every year, it's becoming increasingly difficult (and in some cases, impossible) to pay medical costs out of pocket. Having health insurance provides a safety net, in case you end up with a serious injury or illness, and helps with smaller expenses in the form of free preventive care.

Insurance policies contain exclusions, limitations, reductions of benefits, and terms for keeping them in force. Not everyone will qualify for insurance. Rates are determined by various factors, including but not limited to age, health, and medical history. Extra riders increase the cost of premium. Your financial professional can provide you with costs and complete details. Guarantees are subject to the claims paying ability of the underlying Insurance company. Loans and withdrawals reduce the policy’s cash value and death benefit and increase the chance that the policy may lapse. Using acceleration of death benefits will reduce the benefit available at time of death. If the policy lapses, terminates, is surrendered or becomes a modified endowment, the loan balance at such time would generally be viewed as distributed and taxable under the general rules for distributions of policy cash values.