September is Life Insurance Awareness Month!
Life insurance was once viewed simply as a means of risk management to protect against financial loss in the event of a person’s death. Today, it’s an important part of an overall strategic financial plan and a vital funding mechanism for businesses. Too often, life insurance is left out of the financial planning picture. Many households have no insurance at all, or, if they do, it may not be enough to adequately address their financial objectives.
There are significant benefits to having life insurance:
- Critical component of your financial plan - Life insurance is responsive to a client’s life events such as divorce, unemployment, purchasing a home, or major illness.
- Tax-free death benefit - A significant life insurance advantage is the death benefit payable to a beneficiary, which is generally income-tax-free.
- Estate planning - Life insurance can be used in estate planning to address debt, taxes, income replacement, probate, or charitable contributions. Several policies are applicable, including joint life that insures two people, with the death benefit payable upon the death of the second insured. Irrevocable insurance trusts can be created to act as a policy beneficiary to exclude policy proceeds from an estate.
- Business considerations - Life insurance can act as a funding mechanism to cover several business contingencies. Situations in which it can be applied include business continuity, succession plans, buy/sell agreements for partnerships, or protecting a key employee.
- Charitable giving - Life insurance proceeds are ideal for a charity contribution because they are not subject to income and estate taxes or probate costs.
Now that you know how much you can benefit from life insurance, it’s important to know which type of insurance you need:
- Term Life Insurance -Provides coverage at a fixed rate of payments for a limited period of time, with the death benefit paid if the insured dies during the policy’s term.
- Permanent Insurance - Provides coverage for the duration of the insured’s lifetime, provided premiums are paid to keep the policy in force, with the benefit paid upon the insured’s death.
Additional insurance policies to consider:
- Long-Term Care Insurance - Helps pay for the costs associated with long-term care.
- Disability Insurance - Helps cover expenses if the insured becomes unable to work due to illness or injury.
When was the last time you looked at your life insurance policies? How long ago were they purchased? Have there been any changes in your life or financial plans that might affect the amount of insurance coverage you desire? An insurance review can help ensure your policies fit your current goals and financial plans. Your family’s financial future is far too important to leave to chance. Be certain you are adequately prepared for major life events. Most people need insurance at some point in his or her life – Let’s be sure you have what you need!
This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial advice. For information about specific insurance needs or situations, contact your financial professional.