I hope you all had a wonderful Summer. As we transition into fall, I want to take a moment to discuss life insurance. After all, September is Life Insurance Awareness Month!
When our agency posts something on Social Media, we often get at least one or two responses in a not so friendly tone that claim life insurance is the biggest scam in the industry. I guess that bothers me enough to bring it up in this forum. While there are many different types of life insurance and everyone might not have purchased what suits their needs, it is certainly far from a scam (learn more here). Life Insurance can provide a means to protect your income, pay off debt, provide an avenue for long term care coverage, and help plan your estate, as well as many other things. Life Insurance products fall into two different categories, term and permanent. Let’s walk through each category and the benefits.
Term Life Insurance
Term products are the simplest. You purchase a dollar amount of coverage for a specific time period, typically 10, 20, or 30 years. If you die during that period with the policy in force, the beneficiary receives a single payment in the dollar amount you purchased. A term policy is typically used to cover specific debts such as a mortgage, increasing coverage when you have children at home, and income protection in working years. Term policies do not carry any cash value and are strictly there for protection in the event of a death. The biggest advantage to term, is that it is very cost effective, especially for younger people looking for income and debt protection.
Permanent Life Insurance
Permanent life insurance products remain in place as long as payments are made. They do not have a finite end date and the beneficiary would be paid the death benefit if the policy is in force at the time of death. Some of the terminology you may see regarding permanent life products are whole life, universal life, and variable life. These policies are more wide ranging in cost and benefit, but the general goal is to provide permanent insurance coverage. Common goals include planning an estate, providing coverage for funeral expenses at the time of death, and providing coverage as a solution for long term care coverage. These products are more complicated and usually require a consultation with an agent.
Life With Long Term Care
I do want to take a moment and touch on the last item mentioned, life with long term care. Long term care coverage can be complicated and expensive to purchase. Many have a permanent life insurance policy to cover their needs at time of death and long term care coverage to help with assisted living in the event that becomes a need. There are many hybrid products that cover both situations with one policy. As long as the policy is in force and long term care becomes a need, it will respond. While this reduces the death benefit of the policy, the policyholder can get money to help with assisted living and not erode their estate. If assisted living is not needed, the full death benefit is available at time of death. We believe this is a very affordable way to address two significant concerns while protecting assets in your estate.
For a review of your current situation or more information on anything mentioned, please do not hesitate to reach out to our agency. We would be proud to help you protect your families.
Thank you again for your support.