PlatinumOne Insurance Agency understands that a conversation about life insurance is not always an easy one, but should be part of your long term planning. There are many good reasons to consider purchasing life insurance. Life insurance gives your loved ones the resources to pay off debt, continue living the same standard of living, and provides added financial security. Also remember, the tax-free proceeds from life insurance will provide your loved ones with a tangible expression of your concern and thoughtfulness.
There are different kinds of life policies, but we usually recommend term life. Life insurance works just like other insurance policies. You pay your premium and sign a policy that binds you and your insurance carrier in an agreement where upon your death, policy benefits will be distributed to your beneficiaries. Here is a quick overview of a few of the types of life insurance policies:
Term life insurance is very cost effective. The price is based on how much coverage you need, current age, and length of time you would like the coverage. You pay as you go and can drop the policy at any time. Usually term insurance is purchased in 5, 10, or 15 year terms, but again you don’t have to renew. It is cost effective to purchase a longer policy term, as it locks in the premium.
Whole life policies are more expensive but have some advantages. The premiums never change, and they can gain cash value based on how the issuing insurance company does financially, while having a death benefit if you pass away.
Universal life policies have all the benefit of whole life polices, but the difference is the performance of your cash. Universal life policies usually generate the current interest rate, or a minimum guaranteed interest rate. Also, the premiums are flexible.
How Much Life Insurance Should I Buy?
The amount of life insurance you buy will depend on your individual circumstances, but generally 8-10 times your annual earnings is a good starting point. For example, if you earn $50,000 annually, we assume that your standard of living is in that range. In order for your loved ones to continue in that standard, you would need an investment that generates around $50,000 in yearly interest income. $500,000 in life insurance could return $40,000 to $60,000 per year, depending on the market and economic conditions.
It is important the insurance you purchase is suitable for your particular needs. PlatinumOne Insurance Agency can shop all the best companies and provide you with many different life insurance options.