Life Insurance Options

Scott McEachern |

When John recently lost his wife Betty to cancer, their children were surprised to find out that neither John nor Betty had life insurance. As a result, the children ended up paying the cost of the funeral, and John, currently on a fixed income, is left contemplating whether he can afford to stay in the home they had lived in for over 25 years.

An untimely death can have a major financial impact on those left behind, particularly if there is a mortgage to pay, credit card debt, or an outstanding auto loan. Even final expenses can be a burden.

There are a few life insurance policy options that you can choose from, with each designed for the specific needs of the insured. The more common types of life insurance include:

Term Life Insurance

Term life insurance provides protection for a very specific period, with the premium typically remaining the same throughout that period. For instance, if you take out a $500,000 term life insurance policy for 20 years, and die in year 19, your designated beneficiary will receive the $500,000 tax free. However, if you do not die during that 20-year term, the policy simply expires. Most term life policies offer an extension at the end of the term, but the premium will rise substantially if the policy is extended.


Whole Life (Permanent) Insurance 

Whole life insurance is permanent; designed to remain in force throughout the life of the policy holder, provided that premiums are paid on a timely basis. Premiums for whole life insurance are typically much higher than term life premiums because whole life policies also have a cash value, with part of the premium being invested. Beneficiaries will receive the death benefit portion of a whole life policy upon your death.

The cost of any life insurance policy is determined by a number of factors, including age, gender, geographic location, and other general risk factors such as health or lifestyle that may be taken into consideration. The cost of insurance will obviously vary for a healthy 25 year and a sedentary 50-year-old, but the policy value is also a contributing factor. As an insurance agent, I can help guide you through the process of purchasing a life insurance policy that best suits your budget and your financial goals that will financially protect your family. .

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2024 Advisor Websites.