For most of us, the last thing we want to spend time thinking about is life insurance. This particular subject is, after all, the lead in to thinking about not being around forever – contemplation of your own demise. That is never a comfortable thought, and frankly most people put it off for that precise reason.
Not taking care of business with life insurance, though, can put your family in a terrible position. The costs associated with a funeral can be astronomical – almost never falling below $10,000. That cost, if not prepared for, can be devastating to deal with in addition to the loss of a loved one. In order to protect your family, you need to talk to an insurance agent about life insurance coverage. There are two types of life insurance coverage – whole and term.
When you choose whole life insurance, it offers protection throughout your entire life. The money you pay into the policy actually becomes a financial planning tool that has added benefits beyond strictly the “payout”. These benefits could include being able to borrow against the policy value, and the fact that it gains cash value as you pay the monthly premiums. You can even reach a point where the interest accrued from this case value can pay the premiums.
Many reputable insurance carriers pay dividends with a whole life insurance policy – yearly profits shared with premium policy owners. This is an added tax free benefit that isn’t widely publicized, but can play a part in your decision about coverage. Your ability to take cash out of the policy even extends to removing all of the value in cash should you be in need of it, and the policy would go inactive. And removing cash from a whole life policy can be done without taxes or penalties like you see with 401K or IRA accounts. Of course, this level of life insurance will come with a higher monthly price tag, but it can be worth the extra if you are looking at the larger picture.
Term life insurance is much more limited, and is usually the type of insurance offered by employers who provide life insurance as part of their benefits package. It is definitely cheaper when it comes to the monthly payments, but it does not offer the financial advantages experienced with whole life coverage. You cannot borrow against a term life insurance policy, it does not gain cash value so you cannot remove cash from it, and it cannot be used in the broader sense for financial planning. A term life insurance policy is strictly for a lump-sum payout in the event of the insured’s death. This payout may only be provided to the insured’s named beneficiaries. Unlike whole life insurance which provides “living” benefits, term life insurance is designed to be a death benefit only and therefore one of the reasons it carries a lower premium cost.
No matter which type of life insurance you choose – and there are very good reasons for each one of them – the most important factor is that you have some level of coverage to protect your family. Locate life insurance companies Colleyville TX and get a free quote today.
