What you need to know about Life Insurance. . . How to Make sure the People You Intended to get your Life Insurance Benefits Actually Get the Benefits!

What you will find in this report:

  • Why do I need Life Insurance?
  • How much Life Insurance do I need?
  • What type of Life Insurance is best for me?
  • How do Life Insurance benefits end up going to the wrong person?
  • Learn how to cut through the confusion and purchase the right Life Insurance Protection for your family.

What is Life Insurance?

Simply put, you buy a life insurance policy for a specified death benefit amount from an insurance company.  The insurance company agrees to pay your beneficiary that amount of money when you die.  In most cases your beneficiary receives that money tax free. Your beneficiary can then use that money to maintain their life style.

Many People who want life insurance can’t get it!

Life insurance is not something you go out to the store, pick it off the shelf and purchase at the cash register.  You need to qualify for life insurance.  That means you must pass a physical, complete an application and have your health history scrutinized. It is not automatic and you can be turned down.  If you were going to pay someone’s beneficiary $500,000 if they died would you not check them out? Life insurance is most affordable when you buy it while you are young.  Many times as we age, health issues crop up making life insurance harder to get and more expensive.  TIP: Buy it while you are young and healthy!  Go to our website at www.spencerinsurance.com and listen to Rachel’s story.

Why do I need Life Insurance?

There are many reasons to buy life insurance.  Here are a few examples:

  • Provide a continuing stream of income to your family if you die and they lose your income
  • Pay off debt such as the mortgage, credit cards, and school loans
  • Estate planning
  • Help alleviate the burden of estate taxes
  • Provide a trust income for a special needs child
  • Help you fund the buyout of a partner
  • Help a business recover from the death of a key employee

There are several other reasons to buy life insurance.  Buying life insurance helps give you the peace of mind knowing your family will be protected in the event of your death.  Do not compound their grief.  They will need to deal with your loss; don’t put them in financial distress too. Tip: Consult with a professional for this important discussion.

How much Life Insurance do I need?

This is a complex question.  You need to discuss this subject with a professional.

Many factors will determine how much life insurance is needed:

  • The amount of income needed by your survivors
  • The length of time the income is needed
  • The number of people depending on your support
  • Your goals for your family’s future

A good question to ask is “What do I want the Life Insurance to do for me?  Tip: Sit down with a professional and work out a plan.

What type of Life Insurance is best for Me?

There are several different types of life insurance policies; term, whole, cash value, universal life, variable life, mortgage life insurance just to name a few.  The types of life insurance policies fall into two groups, permanent and term.

Term Insurance is purchased if you need protection for a certain term period such as 10 years or 30 years.  The premiums are guaranteed for the life of that term.  So if you buy a 30 year term you know your rate will not change for 30 years.  However, after those 30 years are up your term may or may not be renewable or convertible.

Renewable term means that you can continue the coverage passed the agreed term, however the company can now change the premium you pay.  Maximum payments are stipulated in the life insurance policy. At some point the amount of the premium can become a burden.

Some term policies are not renewable and end at the end of the term period.  If you want to continue the coverage you would need to reapply for the coverage.  You must go through the application process and if your health has changed the company could refuse you coverage or charge you a much higher premium.

Term policies may also be convertible.  By convertible the company allows you to convert the term policy to a permanent policy.  This is helpful when you decide you want to keep the coverage pass the term period you chose.  The premium for the permanent policy is higher than the term premium however it usually stays level for your lifetime.

Permanent Insurance policies generally build up cash value.  You pay a premium for the policy and the company takes a portion of the premium for insurance costs and expenses, the balance of your premium is invested by the company and builds value in your policy.  If you cancel your policy there may be some cash value returned to you.

The costs of permanent policies are higher than term since they are usually designed to last for your lifetime.

There are different types of permanent life insurance.  Some allow you to choose the investment for your cash value account while others are invested by the company.

A recent life policy is a hybrid of term and permanent life insurance.  It is called Guaranteed Universal Life.  This policy allows you to choose the age you want your life insurance to last, however it usually has no cash value or very little cash value.  For example you can ask the company what premium you would need to pay to have $500,000 of life insurance protection last to age 100, 110 or 120.

Choosing the right type of insurance is important.  It is not uncommon to have a blend of both types. Tip: Concentrate on having the proper amount of coverage.

How do Life Insurance benefits end up going to the wrong person?

It is critical that you set up your life insurance beneficiaries carefully to make sure the benefits go to those you intended to receive them.  Many changes in life should set off an alarm to review your life insurance and the beneficiaries.  Some of those changes include:

  • Marriage
  • Birth of a child
  • Separation/divorce
  • Retirement
  • Death of a beneficiary

Life can get complicated.  You may have children from two marriages or a special needs child.  Planning your life insurance and executing wills are important parts of your family’s financial security.  Make sure you are dealing with professionals when you discuss these matters.  Spencer Insurance has relationships with many estate attorneys who can help you with your estate plans and make sure the people you care about are the ones receiving your life insurance proceeds.

Learn how to cut through the confusion and purchase the right Life Insurance Protection for your family.

Call the professionals at Spencer Insurance Agency for a life insurance review.  Cut through the confusion as we guide you through the critical steps in choosing the proper amounts and types of life insurance coverage. You can reach us at 215-885-2200 or by email at info@spencerinsurance.com.

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