When people think of life insurance, they think of what does it cost for a funeral.
What I think when I hear the word life insurance is – what are my needs, what are my wants, because there are multiple kinds of life insurances used for multiple purposes. For example, term life could be used for covering a specific obligation for a specific period of time – think of a 30 year mortgage, think of “I would always want my children to maintain their lifestyle and education”. Term insurance is typically inexpensive as compared to your other choices.
Business succession planning could also be a place where this is utilized. For instance, I buy “Joe’s Ice Cream Parlor”, and our contract calls for payment in full by the end of the 5th year. To insure Joe that he would receive that payment, life insurance on myself, with Joe as the beneficiary, would be something that Joe should make a part of the transaction.
A more permanent life insurance option would be whole life. Whole life generally costs more, underwriting can be different – ages of issue and death benefits can vary, but this product is typically used to provide a guaranteed death benefit in exchanged for guaranteed premium payments. Premiums pay for the cost of insurance protection and create cash value on a tax deferred basis.
In the environment we are in today, generation two may have quite an unexpected expense to receive their parent’s hard-earned assets. As an example, life insurance can be used in this case to provide immediate cash so that the assets can be maintained (property taxes, insurance, utilities, upkeep, etc.) until such time that asset can either be transferred into a beneficiary’s name, or sold at fair market price rather than a “fire sale” for less than value to meet the financial needs.
We are an independent agency. We quote different carriers so we can “do your shopping for you”. We carry nothing but the best of the best and always try to meet your budget.
If your mother or father happens to have an asset to debt ratio of near nothing or zero, they have funds invested either in bank products or “in the market”. Bank products are extremely low rates of return, subject to taxation and probate. Market funds, on the other hand, are 100% speculation. And include fees, and taxation on any possible gains. So, the happy medium for safe, nest egg money is tax-deferred fixed annuities.
Visit lifehappens.org to calculate your life insurance needs.