Protect What Matters Most with Life Insurance

Life insurance is a contract where an insurance company pays a lump sum, known as a death benefit, to your beneficiaries after your death, in exchange for regular premium payments you make during your lifetime. This money can be used to cover your final expenses (such as your funeral), replace lost income, pay off debts (such as a mortgage), fund a child's education, or for many other purposes, including a gift to charity.

You likely need life insurance if anyone depends on you financially. This includes spouses, children, or other relatives who rely on your income to maintain their standard of living, cover household expenses, or manage debt. 

Here is no single rule, as it depends on your unique financial situation, the number of dependents you have, and your outstanding debts. A common guideline is to have coverage equal to 10-15 times your annual income, but a financial advisor can help you perform a needs analysis to determine the right amount for you. 

The two primary types are term life and permanent life. Term life insurance provides coverage for a specific period (e.g., 10, 20, or 30 years). It's generally less expensive but has no cash value component and ends when the term expires. Permanent life insurance (such as whole life or universal life) provides lifelong coverage. It includes a cash value component that grows over time, which you may be able to borrow against. 

Generally, the death benefits paid to your beneficiaries are not considered gross income and are not taxable under current law. However, any accrued interest may be taxable, and it's best to consult a tax professional for specific advice. 

Yes, you can have multiple policies from different sources, such as one through your employer and another on your own. Both would pay out in the event of your death. 

Your risk of dying primarily determines premiums. Factors include your age, current health, medical history, family medical history, occupation, lifestyle habits (like smoking or dangerous hobbies), and the type and amount of coverage you select. 

Here are a few things to consider -

1. Does anyone depend on you or your income?

2. Do you have loans that someone else co-signed? If you die, they are still going to owe the money to the lender.

3. Do you own property? Someone will need to handle its sale, and until it is, the mortgage must be paid. Any preparation for sale costs time and money.

4. The cost of waiting
   This is based on equal policies (IULs), and the only difference is age. (26, 36, & 46)
   
   a. The cost of waiting 10 years is paying 30% more at 36, and waiting until 46, the premium virtually doubles.

   b. Paying for this policy stops after age 65 and starts paying out an allocation through age 90. The allocation for the 36-year-old is 41% less than that for the 26-year-old and 69% less at 46. In this scenario, the 26-year-old will be entitled to a 6-figure annual allocation that ends after he’s 90. Policy remains in effect until age 120.

5. Many factors can affect the ability to qualify for insurance. Once you contract an illness and become uninsurable, getting insurance is no longer an option. Why take that chance?