That's Life

You can use life insurance to leave much-needed income to your survivors, provide for your children’s education, pay off your mortgage, and simplify the transfer of assets. It can also be used to replace wealth lost due to the expenses and taxes that may follow your death, and to make gifts to charity at relatively little cost to you.
There are two basic types of insurance: temporary and permanent, with many variations within each type.

Temporary (Term) Insurance

As a general rule, people purchase term-insurance policies to insure their families for a given period of time, usually no longer than 15 to 20 years. For instance, term insurance is often purchased by homeowners carrying a mortgage or by parents of young children. Term insurance is also called pure insurance—it consists of a death benefit only. It’s inexpensive compared to other types of life insurance products.

Permanent Insurance

If your insurance needs are longer than approximately20 years, it’s usually more cost effective to use a “permanent” life insurance policy. Whole life and universal life are common types of permanent life insurance. These types of products contain an investment component, and can allow you to accumulate savings on a tax-deferred basis. Some allow you to borrow against any cash value you have built up in the policy.

There are many different types of life insurance products to fit your own personal needs and situation. Check out the following resources to learn more. In addition, you may want to retain the services of a professional financial planner to help you determine your life insurance needs.

Once in a Lifetime

Go to: www.lifehappens.org/insurance-overview/life- insurance/calculate-your-needs to access an interactive calculator that will help you determine a ballpark estimate of your life insurance needs. In addition, have your spouse or significant other perform the same exercise. Enter the information here for future planning purposes:

My total life insurance needs: $    
My spouse or significant other’s life insurance needs: $

1 Policy loans accrue interest and will reduce the death benefit. A policy loan could result in tax consequences if the policy lapses or is surrendered while a loan is outstanding.

This content is based on Kmotion Research 2022 and includes generally-accepted consumer credit best practices such as those expressed on the websites credit.org, www.equifax.com, www.transunion.com, and www.experian.com.