Life insurance is one more way to protect your loved ones. There are two primary options to consider: term and permanent. Both plans provide a lump-sum, tax-free payment to your beneficiaries. So, the right one for you depends on a variety of factors. These include the cost of premiums, the length of time you wish to be insured, and the coverage that you want.
An advisor will work with you to assess your needs and recommend the best coverage to help meet your goals. To sum up, it doesn’t matter if your goal is to replace lost income, maintain living standards, pay debts or leave a legacy.
TERM LIFE INSURANCE POLICY
Term policies are best suited for debt coverage and income replacement, as they provide coverage for a specified period of time. The term is typically based on the time frame of debts, like your mortgage; or it could be the time until children become financially independent. The coverage amount remains constant, regardless of the balance remaining on your debt. The funds go directly to your beneficiary to use as they see fit.
PERMANENT LIFE INSURANCE POLICY
Where term policies can address immediate needs, “permanent policies, which don’t expire and have the same premium for life, can help leave a nest egg to beneficiaries,” says Kris Hird, manager of Life & Health at AMA Insurance. “Since estate planning often looks to long-term protection, a permanent policy may prove to be the best choice.”
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CHOICES WITHIN CHOICES
There are two types of permanent insurance: whole life and universal life. Whole life premiums remain consistent for a set period of time; once paid, the policy remains in effect for your lifetime. If you’re looking for coverage that has the potential to gain cash value over the years with no term limit, this is a good option.
Universal life insurance is similar to whole life, except that it has an investment component allowing you to pay additional premiums above the life insurance costs. So, this amount goes into a tax-deferred investment within your policy.
Hird suggests reviewing your policy every couple of years to update anything that may have changed in your life. For example, the changes could include debt, income, retirement, starting a business, or a new child or grandchild. To connect with an AMA Insurance representative, visit AMA’s Insurance Hub. They can review or open a policy for you and help navigate a claim.
For families who aren’t quite ready to sit down for a full discussion, the company offers online pre-planning seminars. To learn more or sign up, visit dignitymemorial.com.
AMA members save 10% on pre-arranged and at-need services with Dignity Memorial.