What will happen, G-d forbid, you or one of your loved ones doesn’t come home. How will your loved ones continue financially? Even though there is no replacement to a loved one, it is unnecessary to be also faced with the financial burden this may cause.
Protection doesn’t need to be complicated or expensive. It just needs to work. Sometimes it is best to start with the basics: TERM LIFE INSURANCE
Why? Term life insurance provides valuable life insurance coverage at a very affordable cost. It can be a cost- effective solution if you’re looking to protect your loved ones without the added expense of permanent life insurance. Term life insurance provides death benefit coverage that can be used to pay a mortgage, finance education, preserve a family business, or keep your loved ones from suffering the financial hardship that often accompanies one’s passing.
Here is how it works.
Term life insurance provides death benefit protection for a pre-determined period, usually 10, 20, or 30 years (some companies do not offer 30 year term coverage, since statistics show that most people replace, convert or lapse the policy before it expires). If a person passes away while the policy is in force, their beneficiaries will receive the amount of the death benefit, generally federal income-tax-free. It is basic protection that provides real help when it is needed most.
Unlike permanent insurance, term insurance has a contractual expiration date. This means once the contract expires, one is no longer insured.
Think of term like renting an apartment, once your term—or lease—ends, you no longer are covered. Think of permanent coverage like owning a home, it is an asset.
Term insurance can also be equivalent to renting-to-buy. However, not all insurance companies are equal. When deciding to purchase life insurance, it is extremely important to purchase a plan from a company that allows the option to convert to a permanent plan. Therefore, before purchasing a term plan, shop to determine if the company is Mutual (owned by the policy owners vs. owned by stock holders), pays out consistent and/or high dividends, and, most importantly: has a good product to convert to. This will be a valuable advantage if you decide in the future you want to, or need, the financial benefits of permanent life insurance.
Since life insurance is based on health and age, it’s advisable to purchase your plan as young as possible to obtain a preferred rating while young and healthy, which translates to low premiums. Obtaining a great rating stays with you throughout the life of the policy so that when you decide or need to convert, that rating transfers with you over to the new policy. The choice of company one chooses can make a huge difference when converting. I have often witnessed that during the term of the policy, the insured’s health diminishes, causing them to be uninsurable or poorly rated, making it necessary for them to obtain a permanent plan. So, the sooner the better.
Permanent insurance, as part of your insurance plan, is often preferable. We will discuss this next week. Remember, term allows you to have the sufficient coverage you need (10-20 times one’s earnings) at an affordable price. Don’t leave home without it.
Stay tuned to next week’s column when we will discuss what is “permanent insurance” and why it is an asset like real estate. If you have any questions, please don’t hesitate to contact me for a free review or consultation.
INFINITY FINANCIAL SOLUTIONS
420 Lexington Ave, 15th Floor #122
New York, NY 10170
Registered Investment Advisor, MDRT member
New York Life insurance company
By: Felicia Kestenberg