Life Insurance

Aug 21, 2020

Take a moment to imagine what would happen if you were involved in a fatal accident and died today.

Would your loved ones have enough money to get through the next few months?

What about the next three years? The next five years?

Would they have to deal with the possibility of losing their home?

Would your children still have the opportunity to attend college?

What if you became one of the 15 percent of American men and 9 percent of American women who die before age 60?

When your loved ones depend on your financial support for their livelihood, it becomes patently clear why life insurance is a must:

Life insurance allows you to financially protect your family!

Through life insurance, you can:

  • Provide for your spouse with extra tax-free money.
  • Make sure your kids’ and aging parents’ needs are taken care of with tax-free money.
  • Put the proper plans in place so your business doesn’t fall apart.
  • Leave a legacy for charity or for your foundation.
  • Shield your family from unintentional financial burdens.

Dying suddenly — in an accident, by an unexpected illness, or even in a natural stroke of bad luck — can happen at any time. The mortgage, bills, and daily costs of living don’t stop after you’re gone. Arranging ahead of time with a life insurance strategy can make things easier for those whom you leave behind.

Is Life Insurance Worth It?

In short: yes, life insurance is worth it.

Managing your risk constitutes a major element of your financial plan. And since we all want to protect our hard-earned wealth, life insurance also gives you a way to pass along your hard-earned assets to your children.

A death benefit allows your loved ones to replace the loss of your income, repay debts, pay unpaid medical bills or taxes, and so much more. If you have a spouse, children, or aging parents, just imagine how their lives would change if you pass away and leave them without your income — on top of other “final bills.” 

From this perspective, life insurance becomes a selfless investment to help buffer against a financial crisis when you pass away.

Is Life Insurance a Good Investment?

The value of life insurance goes far beyond the death benefit. Here are four very good reasons why life insurance is a good investment:

  • Life insurance provides a means to protect your family and loved ones. You can also leave an inheritance through your life insurance.
  • Life insurance policies aren’t counted as part of your estate — and thus, are shielded from federal taxes. It’s legal to own several whole life insurance policies.
  • Life insurance is a useful financial tool for business owners. This is especially important if you’re a key person or part of a business partnership. 
  • Life insurance is an asset. Policies are salable for their cash value.

4 major benefits of life insurance

Minimize the risk of a financial crisis after your passing

The last thing we want is to leave a financial burden behind for our children and loved ones. Through life insurance, you can give your family a parting gift of financial stability.

Get in touch today to start the conversation!

Types of Life Insurance

Life insurance can be divided into two major coverage categories: Term and Permanent.

Prosperity Financial Group Term vs. Permanent Life Insurance

Term vs. Permanent Life Insurance

Term vs. Permanent: Length of coverage

Term life insurance covers you for the term length, which is generally 10, 20, or 30 years.

Permanent life insurance covers you for the rest of your life, no matter if you live to age 75 or age 120.

Term vs. Permanent: What to consider

With term life insurance, you’ll factor in your expected future expenses to anticipate how long you’ll need coverage. You can opt to be insured until your mortgage is paid off, until your kids graduate from college, or until you retire. If you die before your coverage term ends, your beneficiaries will receive the death benefit.

With permanent life insurance, you’ll receive lifetime coverage and a cash accumulation feature. You can access your policy’s cash value to cover expenses like your children’s college costs or retirement costs.

Term vs. Permanent: Costs

Term life insurance is simpler, more affordable, and doesn’t always require an insurance agent.

Permanent life insurance is significantly more expensive than term. The additional bells and whistles, like cash value and tax-free dividends, come at a higher price. Annual premiums are up to five times more expensive for the same dollar amount of coverage.

Deciding what’s right for you

When choosing a policy, it comes down to your personal preferences and financial situation. 

Term life insurance might be right for you if:

  • You need an affordable way to protect your family.
  • You’re looking for coverage to help your spouse pay for day-to-day expenses if you were no longer around.
  • You want to be covered until your children are financially independent.
  • You require a policy to help pay specific co-signed debts, like a mortgage or student loans.
  • You anticipate that you’ll have substantial retirement savings.

Permanent life insurance might make more sense IF:

  • Life insurance is part of your long-term financial strategy.
  • You’re looking for lifetime coverage.
  • The cash value component is helpful for your future needs.
  • You don’t mind paying higher monthly premiums for extra benefits.

Let’s take a closer look at the details of Term Life and Whole Life insurance.

Term Life Insurance

Term life insurance, also known as pure life insurance, guarantees a payout upon your death within a specified term. Your term life insurance premiums are based on your age, health status, and life expectancy.

  • Term length. Terms generally range from 10 to 30 years; choose a term length that matches the timeframe of your financial responsibilities. For example, you can opt for coverage until your children are financially independent, or until your business loans are paid off.
  • Affordability. Term life insurance is, by far, the most affordable form of life insurance. It’s worth it if you want financial security for your loved ones at a budget-friendly price.
  • Drawbacks. Term life policies don’t have a cash value or savings component. Coverage is limited to your chosen term, and once coverage ends, you don’t get back the premiums paid. And, if you choose to buy another term life plan, your premiums may go up.

Permanent Life Insurance

Permanent Life insurance gives you lifetime coverage and cash value benefits. You have a few options for Permanent Life insurance depending on your individual preferences and needs.

Prosperity Financial Group Types of Permanent Life Insurance

We Can Help

Life insurance is a highly effective tool for wealth management and wealth transfer. Through life insurance, you can give your family a parting gift of financial stability.

Policies are designed to protect your family and your business from the high costs associated with your passing. Death benefits can provide survivor income, help pay off debt, or otherwise generate much-needed liquidity upon an unexpected death. And if you’re a business owner, policies on you and your partners can supply the necessary cash to keep the business intact. 

Our Fiduciary Advisors can help you select the life insurance plan that’s right for your specific situation. Please fill out the form below and we’ll get back to you shortly. We look forward to hearing from you.

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