Let's face it, we all know we need life insurance. In todays age a lot of people are starting to realize that life insurance isn’t just for grandma and grandpa. There are many avenues with life insurance to help protect your assets, your loved ones, and your legacy with life insurance. Most people know of two types of life insurance:
Term Life Insurance:
It has a length of time that this policy will carry you and protect your family against the loss of you. God forbid something happens during the 10, 20, or 30 year term that you choose to opt in for, your family will get a check to take care of your final expenses and some left over to keep the house, the lifestyle, and some peace of mind that even though you aren’t there everything financially will be okay. In short its like car insurance, you only use it if something happens to you. You also only pay on this for the length of the team. If you out live the term the coverage disappears and you stop paying those monthly premiums. Usually cheaper but now you understand why.
Whole Life Insurance:
It is permanent insurance that you pay on for the remainder of your life or until you have paid in up to the cash value amount. This coverage isn’t in place for IF you die but for WHEN you die. You are saying you for sure want to make sure that when you pass your death benefit will go to your beneficiaries to take care of those final expenses and if there is enough, leave a legacy.
Most of the policies that actually get issued are simplified issue products; meaning you don’t have to go to the doctor to give blood or urine to see if you can qualify for the coverage. They just go through a quick questionnaire and use an algorithm to decide if you can get the coverage or not!
THAT’S RIGHT!! They have to decide if they want to give you that coverage. You can’t just go get life insurance because you want it, you have to qualify for it! Your age, health, and habits are taken into account when determine the kind of coverage and amount of coverage you can get so the earlier you take care of getting that coverage the better! We never know what underlying health issues are going on inside of us and the sooner we get life insurance the cheaper and more accessible it will be.
There are also other life insurance options(at bottom) as well as extra options inside of Whole Life and Term Life that can be of extra financial benefit to you!
With Term Life there are options for those that fall in the right age and health groups that actually allow you to use these policies as a long term savings account on top of the protection you are guaranteed! All of us could use more help saving and this is one of my favorite ways to save. Essentially you choose your term length and the company tells you how much your monthly premiums would be based off the amount of coverage you are requesting and then you multiply that by 12 months and then multiply that by the amount of years your term will last. This number will be the amount you can be looking to have reissued to you at the end of your policy’s term! Imagine getting $30, $50, or even $100k back in 20 to 30 years all while having anywhere from $25,000 to $250,000 in coverage on you incase anything was to happen? A lot of these products also have living benefits built in so if you were to get diagnosed with a chronic, critical, or terminal illness that death benefit would be paid out upon diagnosis so you could help cover your life expenses and medical bills while you can’t work and not be a burden on your family. These cash back/return of premium products are the way to go if you can qualify!
With Whole Life you can get approved for bigger policies through the blood and urine testing route and actually have access to building your own bank through the cash value and dividends your policy accrues. These dividends are split between all of the people participating in your type of policy. Imagine being able to call up your insurance carrier and say “Jim I need you to wire me a $40,000 loan against my policy”. Within hours those funds would be in your checking account and you could take that $40k to the dealership to buy you a brand new truck or write a check to your sibling for a new start up they are creating or plan that trip you’ve been putting off for too many years and travel the world for 6 months? That is the power of cash value life insurance policies! And the best part… when you pull that money as a loan it is TAX FREE! Now you either want to make sure you pay it back over time or just be okay with it being subtracted from the death benefit that pays out when you die. Either way with these policies you are investing in protection but also will always have access to that money when you need it, rain or shine circumstances. That is financial freedom right there!
Other Insurance options that can build cash value or be used as collateral for loans and other investments:
Universal Life
Variable Life
Universal Variable Life
These are similar whole life in terms of dividends except that you have a contract negotiating the dividends you would receive since these are attached to the stock market. If there is a rise in the market you get your agreed upon dividend percentage but if there isn’t a rise your money just stays the same. It’s like an annuity but you also get a guaranteed death benefit with it! With whole life you are always guaranteed an equal share of profits the insurance carrier makes regardless of rises and falls in the market. If the company makes money that year, you do too!
