LIFE INSURANCE

Life Insurance is about protecting the ones you love and care about so that the dreams and plans are not disrupted by the untimely events of one's life. Our Advisors recognize how important making the right decisions around life insurance are for you and your loved ones, we also believe that it varies based on the period of life you are in, whether young and just starting out, mid-life with higher income, building nest eggs for when you retire or retirees considering their future after years of employment. Our advisors believe that it starts with having the right conversation and understanding what is important to you.

What is Life Insurance?

Life insurance is a contract between you, the policy holder, and an insurance company also known as an insurer. You a pay the premiums to keep the policy active and in exchange for your premium payments, the insurance company will pay a lump sum known as a death benefit to the beneficiaries you designate in the policy following your death.

In most cases the death benefit your beneficiaries receive are tax-free and they can use the money for whatever purpose they choose. Most are familiar with using life insurance to pay for funeral costs, burial and final expenses however, the money can be used towards paying a mortgage or rent, education, child care, typical monthly bills and even as income replacement.

Essentially, it can be used for whatever is necessary to help maintain the standard of living that otherwise can be affected by one's death.

Cost of Insurance

Every life insurance company uses parameters such as the age, health, smoker versus non-smoker and gender of the person being insured in their analysis to help determine the cost of insuring the person, that cost of insurance is charged to the person as part of the amount of the premium for the policy.

Types of Life Insurance

There are basically two types of life insurance, term life insurance and permanent life insurance. Term Life covers you for a specified period of time, such as 10, 15, 20, or 30 years. Permanent Life insurance has two categories whole life and universal life, and is designed to cover you for your entire life as long as the premium payment remain up to date.

Term Life

Term life Insurance covers for a period of time and is a level premium meaning that the premium will not increase, once the period of the term life expires the coverage by the company ends.

The premium for term life insurance is normally less than that of permanent life in part because it is for a specified time and does not create "cash value". When a term life policy ends additional term life coverage can cost more: (a) because the person is older and; (b) may have some contributing health factors that come with age or otherwise.

That said, while term life costs less upfront, it may cost more than permanent life insurance over the span of the person's life.

Permanent Life

Permanent Life Insurance is designed to cover you your entire life and comes in whole life and universal life, which has various types which are guaranteed, indexed, and variable.

Permanent life insurance cost more than term life insurance because: (a) it is designed to cover your entire life; (b) a portion of the premium goes towards "cash value", a portion of your policy that earns interest and over time may be available for you to withdraw from and/or borrow against.

Whole Life

Whole Life Insurance is coverage that is guaranteed to remain in-force for the entire life span of the insured, provided the policy premiums are paid and kept up to date. The premiums are typically level meaning they will not increase for the life of the policy. A portion of the premiums go towards the "cash value" in the policy and is available to the policy owner to borrow against or withdraw. Depending upon the insurer, some policies may offer additional "living benefits", such as terminal illness, chronic illness and critical illness, that can be used by the insured while they are alive and charged against the value of the death benefit.

Types of Universal Life

There are different types of Universal Life Insurance policies and each with a specific purpose, they are Guaranteed Universal Life, Indexed Universal Life and Variable Universal Life.

Guaranteed Universal life Insurance (GUL) provides a guaranteed death benefit amount to your beneficiaries as long as the premiums are paid on time and kept up to date. The premiums are level and there is very little cash value growth.

Indexed Universal Life Insurance (IUL) provides death benefit protection and "cash value" growth against based on an index such as the S&P 500. The "cash value" of the IUL typically has a guarantee and non-guarantee options, they vary based on the insurers and their product types.

Variable Life Insurance (VUL) provides a combination of life insurance and the "cash value" which functions similar to investments which are risk related in funds such as stocks, bonds, equity funds, and money market funds. Because of the "cash value" investment classification VULs are regulated under the federal securities laws, the policy owner owns the risk of the policy which can be both gains and losses.

Choosing the right Life Insurance

The most fundamental part of a strong financial plan is a protecting the assets in the plan, that is done through health insurance, home insurance, auto insurance and most importantly life insurance.

While the other insurance coverages may never be exercised, most assuredly at some point life insurance will be needed. It is understood then that everyone should have life insurance, but everyone's need of life insurance differs from Final Expense to Retirement Planning and everything in between, so choosing the right coverage for you should be well thought out and discussed.

At 4 Core our advisors take the time to complete a needs analysis that considers key factors, some of which are mentioned above, and are appointed with several highly rated insurance companies, so that we can provide you with life insurance recommendations suitable to you.

Finally, our advisors will walk you through the approval process and purpose to be there for your loved ones at that most important time, when a claim needs to be processed.