Life insurance helps protect what you love

Brad Ward 23 Nov 2017

Life insurance helps protect what you love.

You don't have to be wealthy to need life insurance. Most of us are capable of putting the right protection in place to protect our loved ones. The only question is why haven’t you done it yet?

Certain types of insurance like home and auto are essential to protect our houses and cars. Some are mandated by our government, and some are not. We may have some life insurance at work but is it enough. We protect our homes and our cars but are the people in those homes and cars protected in case of an unexpected death of a breadwinner? Is there enough life insurance in place to ensure your loved ones or your business will be able to thrive without you around?

Tax-free life insurance proceeds can be received within days of making a claim. This money can be used to cover funeral costs and a host of other expenses. Life insurance can also help the survivor with legal fees, taxes, outstanding medical bills, mortgage payments, loan payments, credit card bills and childcare. Perhaps the survivor would like to be a stay-at-home parent for a while and take care of the children. Life insurance can give the survivor options and soften the loss of income.

Is life insurance a worthwhile investment?

How much is your family or business worth to you? Are they worth protecting? If so, then for a small premium you can provide that extra level of security to wrap around the people you love. If you are into growing wealth along with providing protection then for a little higher premium you could consider applying for permanent life insurance and grow a tax-deferred asset as well.

In the case of a family with children, it makes sense to provide for the surviving spouse. Maybe they would like to quit work and stay at home to take care of the children. Instead of having to hire someone else to look after their children, they have the option to provide the parental care themselves.

But what about the childless couple or single person? Even in this case, you married someone you loved and bought a home together that has a mortgage and would probably like to provide a little extra money to soften the blow of you not being around. To prevent your spouse from struggling to pay their bills and have debt when you pass away, you can help them out by putting some coverage in place. 

Single people also have life insurance needs – to pay off debts when they pass away and perhaps leave a legacy to family or a charity and to offset estate taxes.
When you think about your need for life insurance, it almost doesn't matter how much you earn or whether you earn any money at all. Instead, you need to make the decision based on whether someone you love will be negatively financially impacted should use pass away. If the answer is yes, then you should ensure you have adequate life insurance coverage. 

How and when to buy life insurance

So now you have decided to apply for life insurance. The next step is to determine which policy to buy. Whether you are healthy or not you can still apply for life insurance. Obviously going through a medical to qualify for life insurance could ensure you a lower rate but if you prefer not to go through medical tests, you still can get no-medical life insurance coverage to protect what matters to you most.

Once you have decided to apply for life insurance, you need to determine how much to apply for. The first level of life insurance coverage is to provide for final expenses like a burial. If you have debts outstanding, would like to leave education funds for children, emergency funds for the survivor and money for a charity then you can add more coverage. The next level of coverage is to help replace your income so that your family will not have to struggle financially. 

To help with determining the right amount it is best to see your insurance agent. They will help you with the numbers and make projections for how much is needed based upon some estimates of future inflation, taxes and investment returns.

Who needs life insurance?

Whether it’s your spouse, partner, children, another family member or a friend, life insurance can be a great way to help provide for the people who rely on you. If you have a family that is depending on your income, it is important to put some life insurance in place to make sure that they can maintain their lifestyle if you should pass away.

When you are young, you should also consider purchasing life insurance to help pay off debts and provide for future life insurance needs like protecting a mortgage once you own a home and even enough to provide for a future family. 

When you are young and healthy, your premium payments will be low so think of it as a future investment for yourself. 

Older folks can also benefit from life insurance. If you have not yet purchased life insurance, consider owning your own policy to provide for your children or grandchildren to give them a better start or help your executor offset some estate costs. Owning permanent life insurance with cash growth can give you some much-needed money to help with unexpected health costs or home upgrades required should your health decline.

Business owners should also think about owning life insurance to provide an easy transition for the surviving shareholders to purchase their part of the business in case of their passing or help with costs of replacing a key employee should the key person die.

Types of life insurance

After you have decided on the amount of coverage that suits your specific needs you need to figure out whether you will apply for term life insurance, permanent life insurance of no-medical life insurance.

Term life insurance typically covers a temporary need like paying off a mortgage or an outstanding debt. It can also be used as a long-term coverage but is more costly over a more extended period than permanent life insurance. If your term policy is convertible, it can be converted to permanent life insurance usually without further health checks. There is no cash growth in a term policy.

If you are looking for life insurance coverage and a way to grow wealth tax-deferred than you should consider permanent life insurance. Permanent life insurance lasts for your whole life and should be applied for if you are looking for lifetime life insurance coverage. Permanent life insurance comes it two main forms: Whole Life insurance and Universal Life insurance. 

Whole life insurance has a guaranteed cash growth component - and with some insurance companies - a dividend cash portion as well. The cash in a whole life policy is managed by the insurance company. 

Universal Life insurance provides coverage and the ability of the policy owner to grow cash in an investment or investments of their choice and based upon their investment risk tolerance. This can be a good choice for people who are self-employed or have an unpredictable income since they can pay extra when their income is high, and then pay a little less when they are not earning as much. 

How do you select the life insurance that is right for you?

Once you decided to protect someone or something you hold dear to you, then the next step is to choose the right type of life insurance that fits your specific need. We at can help you make the right choice that fits your budget. Contact us today for an appointment.

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