The most important reason to have life insurance is to avoid leaving your loved ones with significant debt and expenses. We are not promised tomorrow, and when you leave your family behind, there is a serious financial impact. Life insurance will help with covering burial costs, paying off the mortgage, paying for your children’s continued education and provide your family with income after you are gone.
You must consider the amount of coverage that you need and include enough for your family’s well-being. In most cases, even if you are fortunate enough to have benefits through your work, the life insurance provided by your employer at work is insufficient for your needs.
If you have a business, life insurance is helpful because losing a key employee could cripple your operation. Using life insurance to protect your key employees is a smart move. Life insurance also can provide a method of perpetuation for your business and be used to buy out ownership from the older generation.
THERE ARE THREE MAIN TYPES OF LIFE INSURANCE THAT PAY OUT A SET AMOUNT OF MONEY TO SOMEONE ELSE WHEN YOU DIE:
TERM LIFE INSURANCE
Term life insurance is the lowest-cost option and covers you for a specific period of time, usually 10, 20 or 30 years. If you die within that timeframe, the policy proceeds would be paid to your beneficiary.
WHOLE LIFE INSURANCE
Whole life insurance continues as long as needed, until you die, and has a cash buildup that is like a savings account; you can borrow against the cash value if needed.
UNIVERSAL LIFE
Universal life insurance is similar to whole life, but it allows more flexibility on the monthly payments and cash buildup.
To save on life insurance, get your coverage in place when you are young and healthy. Making annual payments is less costly than monthly payments. Non-smokers have lower rates, and the build of your body is considered in the rating (i.e. your height and weight). Medical conditions and the medications you take are included in the calculated rate and usually cause the rate to be higher. Shop around to find the company that will provide the most coverage for the lowest rate.
Angelyn Treutel Zeringue is president of SouthGroup Insurance Services, a CPA, PWCAM, CBIA and licensed Trusted Choice insurance agent. Reach her at www.southgroupgulfcoast.com, (228) 385-1177 or azeringue@southgroup.net.
