How Much Are You Worth To Your Family?

Hi everyone,

Today I wanted to post about two questions I get all the time.

1. Why should I get life insurance?
2. What kind should I buy?

There are many reasons why people buy life insurance. Here are just a couple of examples:

• Income Protection: most people don't realize that if they were to pass away unexpectedly it would leave their family without one of the household incomes. Would the family be able to keep the same standard of living? Would the widow have to go back to school? Would they be able to go directly back to work? Could they keep the house?.... Etc. Life insurance can make sure that a family could have a dependable second income for a predetermined period of time.
  
• College Planning: Many parents have dreams of helping their children with school. If something were to happen to you, would you still want to be able to provide those luxuries? Life insurance can make sure that there is a lump sum of money available for your children's college needs if you are not around and unable to help out.
  
•  Mortgage: This seems to be the obvious one. Most people get life insurance to make sure that a house, cabin, or property is paid off in the event of a death. This will relieve a large portion of monthly expenses for the family.
• Debts and Final Expenses: Most people have some sort of extra debt. (car loans, school loans, credit card debts, etc.) The majority of people use life insurance to protect against a family inheriting extra debt left behind by the deceased. Others want to make sure that all funeral arrangements will be taken care of and paid for with their coverage.
• Guaranteed Income and Forced Savings: Some use life insurance as a mid-term bucket of money, as some life policies allow a "Cash Bucket" to grow within the policy to be used at a later date. (Ex: pay off mortgage early)

• Term: this product is just like it sounds. It is simple and meant to protect your family for a specific period of time. Ex: 10 years, 15, 20, 30, etc. When these policies reach their end dates they disappear. Some term policies have the ability to convert into whole life policies (Ask your advisor about this option). Other term policies have a return of premium attached to them (If you didn't pass during the term :), the insurance company will refund your premiums paid in).
• Permanent Term "Whole Life": These policies are meant to be in place for ever. They are not an investment and typically hold a low cash value. That's why I like to refer to it as "Permanent Term". The majority of your premium goes directly to the cost of insurance. 
• Universal Life or Accumulation Whole Life: These policies are the most expensive, however they have the most flexibility and options. Some of these options include the following: Flexible premiums, cash accumulation strategies, forced savings, and tax reduction. There are many more reasons these policies are used, but these are some of the basics.