Life Insurance

Assessing your need for life insurance will depend varies with your age and responsibilities. It is a very important part of financial planning. There are several reasons to purchase life insurance.

When determining how much life insurance you will need, a rule of thumb for many experts is that you should purchase  five to eight times your current income. Here are some questions you should consider as well, which may bring you to a different amount:

1.Who in your family provides income, and how much?

2. How would my family fare economically if you were to die?

3. Does anyone else depend on you?

4. Do you have children that may need financial help for their education in the event you die?

5. How will your family pay or final expenses and any debt you have?

6. Will youhave estate taxes

7. How will inflation affect any of these needs

There are two main types of life insurance:

• term
• whole life

Term life insurance lasts for a pre-determined period ranging from 1-30 years. There are two types of term - level term, in which the benefit remains the same throughout the term, and decreasing term, in which the benefit decreases throughout the term.

There are three main types of whole life:

• whole (permanent) life
• universal life
• variable life

Whole life insurance pays a death benefit whenever the policyholder dies.

With whole life, the death benefit and the premium stay the same throughout the length of the policy.

Universal life policies have more flexibility than traditional whole life policies. They include a  savings component that earns a money market rate of interest. Once enough money accumulates in the account, the policyholder can alter premium payments.

With variable life the death benefit is combined with a savings account that can be invested in stocks, bonds and money market mutual funds. Becasue of the added flexibility, there is more risk. Loss assosiated with of any investments made can result in the loss of the cash value and death benefit.

There are additioanl variations and options that we would be happy to discuss with you.

As you may expect, the risk of these plans is offset by the insurance companies bby increasing premiums and decreasing the amount of benefit you can buy.

In somes cases, you could end up paying more im premiums than the benefit amount over time. In other cases, the benefit may only be paid out if the death occurs within a couple of years.

It is important to know the details and figure out for yourself if these plans will be a good choice. In some circumstances, they may.

When you switch polices you will likely enter a new contestability period. That period usually lasts two years. During that period, if you die, the insurance company will likely investigate all statements you made on your application. If they find any inaccuracies then they can deny paying the benefit.