Financial Strategies Of Amelia
Life Insurance
Life insurance has many uses and should be reviewed as part of most financial plans. In addition to death benefits, some life insurance products have the potential to provide benefits during life as well as income during retirement¹
In addition, life insurance is invaluable in business planning, protecting you in the case of the loss of any key employees or partners. The payments from life insurance can be used to help pay out your partners spouse or give you cash to replace a key employee. Without considering the benefits of life insurance you could be exposing your business to unnecessary risks.
Life insurance can be divided into two main categories:
- Term insurance. Term insurance is taken out for a limited period of time such as 10 or 20 years. The premiums for term insurance are usually lower than those for permanent insurance because term insurance is for a limited number of years and does not accumulate cash value. If you live longer than the term of the insurance then your premiums have the potential to increase substantially if you want to continue with the insurance.
- Permanent insurance. This is insurance where you are insured for the rest of your life as long as the premium is paid. When you die the life insurance company will pay your heirs the death benefit. In addition, you may have access to “living benefits” based on certain qualifications.
Life insurance has the potentialable to pay you benefits during life. It does not only pay out at death. You can potentially accelerate your benefits for:²
- Terminal illness. If you are terminally ill with up to 2 years left to live many insurance carriers will pay you a large portion of your death benefit during your life. Some will even pay 80% of your term insurance death benefit. Under some policies you can use your money to pay for experimental medical treatment not covered by your medical insurance. You can pay for that last wonderful trip around the world or you can get your financial affairs in order.
- Chronic illness. If you are unable to perform two of the six activities of daily living (eating, toileting, transferring, bathing, dressing and continence) then you are able to receive some of your benefits before death. You can then use your payments to pay someone to help take care of you.
- Critical illness. If you suffer a critical illness, such as a heart attack, stroke, end stage renal failure, ALS (Lou Gehrig’s disease) or blindness, your benefits can be accelerated.
In addition, most permanent life insurance has the potential to build cash value. You are then able to borrow or withdraw the cash value from the life insurance policy ¹. You can use the cash value for any purpose, to pay for college, to buy a new house or to supplement your retirement income. Some life insurance policies have riders that may enable you to have income for life with your income guaranteed³ never to run our or go down in value if certain qualifications are met.
What other product can protect you during life, pay your loved ones on death or provide for your retirement? Life insurance should be reviewed as a key element in a comprehensive financial plan.It can be more than just the death benefit. Please call or e-mail me so that I can help you find the right life insurance product for your needs.
Riders are optional, may be available at additional cost, and may not be available in all states.
¹ Policy loans and withdrawals reduce the policy’s cash value and death benefit and may result in a taxable event. Surrender charges may reduce the policy’s cash value in the early years.
²Payment of Accelerated Benefits will reduce the Cash Value and Death Benefit otherwise payable under the policy. Receipt of Accelerated Benefits may be a taxable event and may affect your eligibility for public assistance programs. Please consult your personal tax advisor to determine the tax status of any benefits paid under this rider and with social service agencies concerning how receipt of such a payment will affect you, your spouse and your family’s eligibility for public assistance.
³ Guarantees are dependent upon the claims-paying ability of the issuing company.