Give the Gift of Life Insurance this Valentine’s Day
Are you struggling to find a gift to get your loved one this Valentine’s day? If so, you have come to the right spot! This year, instead of giving your loved ones something material for Valentine’s day, you can give them the greatest gift of all. The gift of peace of mind if anything should happen to you or a loved one … the gift of life insurance.
Life insurance isn’t a fun thing to think about, and it may seem like an unnecessary expense. But if you have people who depend on you for financial support, then life insurance is really about protecting them in case something happens to you.
Life insurance can be confusing, so here’s a rundown of the basics.
Types of Life Insurance
Life insurance is divided into two categories: term and permanent (also sometimes referred to as whole).
Term Life Insurance
Term life insurance has a specified coverage period (term), but can usually be renewed or converted into a permanent policy at the end of the term. Premiums are generally affordable initially but can increase substantially when renewed.
Whole Life Insurance
Whole life insurance is a type of permanent insurance that offers life-long coverage combined with a cash-value savings component. This type of policy has higher premiums than term life. Premiums remain constant throughout the policy and a portion is invested by the company, which becomes the cash value of the policy. Whole life insurance pays a fixed amount upon death.
Universal life insurance
Universal life insurance is another type of permanent insurance policy that combines term insurance with the ability to earn interest on the cash value, paying a market rate of return. Cash value grows tax-deferred, and can be withdrawn or borrowed from the policy. It is more flexible than whole life insurance as it also allows you to change your premium payments and death benefit, within limits.
Variable Life Insurance
Variable life insurance is similar to universal life insurance in terms of flexibility and an investment aspect. However, instead of simply earning interest on the accumulated cash value, policy owners have more control over how to invest that cash. The ability to invest in professionally managed investment options allows for the potential to accumulate cash value while providing death benefits protection. However, there is greater risk for loss due to this benefit.
Cost of Life Insurance
Rates for life insurance policies will vary. Women typically pay less than men, due to their longer life expectancy, and rates increase with age. Also, smokers pay more than nonsmokers. In general, life insurance gets more expensive as a person ages. A 25-year-old person in good health can find a sizable six-figure term life policy for just a few hundred dollars a year. For a senior citizen, that same coverage can cost thousands more.
How Much to Buy?
It’s hard to know how much life insurance to buy. Many people decide based on an income replacement calculation, between 5 and 10 times the amount of your current income.
Think about your personal circumstances: Are you the sole income provider in your household? Are there other expenses, such as college tuition, that may arise in the future? Don’t forget to include potential medical and funeral costs. Above everything, you want to be sure your family does not get stuck with bills, debts or expenses that they cannot afford. Depending on your needs, you may want to consider buying supplemental coverage.
Why Purchase Now?
Buying life insurance may seem unmanageable right now, but it could be a smart decision. Unlike many other benefits, life insurance is actually more affordable right now than in the recent past. Plus, during this tough economic period, ensuring that your family will be financially secure in the future is more important than ever.
Giving the gift of life insurance and peace of mind if anything should happen to you or a loved one is the greatest gift of all! Even if you already have life insurance through your employer, you may be underinsured. Call us today – we can work with you to ensure that there aren’t any gaps in your current coverage.