Term Life Insurance

Term life insurance is insurance that assists family members or beneficiaries in terms of finances in the event of your death. This insurance will pay the named monetary beneficiary a sum of money once death has occurred. There are often exceptions to consider, such as death in the case of suicide and other self-harm.

Many don’t understand how much coverage they may need in the event of their death. But, at minimum it is important to at least be able to cover outstanding personal death and the costs of funeral arrangements. Additional coverage can help cover mortgage payments or any other financial burden your family might have after your death. If you are the main contributor to family income, having life insurance could be crucial to your family’s well-being, and is recommended.

Premiums for term life instance might change based on numerous factors. These can include gender, age, health, medical conditions, or smoker/non-smoker. If you do smoke, it is likely that you will face a higher premium than those who do not.

Permanent Insurance

Permanent insurance is an insurance that accumulates in cash value. This value can be paid once the policy is surrendered. Or, the value can be borrowed to assist in various payments, so long as the policy remains in force. Permanent insurance can assist in financial burdens such as accidental catastrophic illness, terminal illness, or long-term care. The cash value of the insurance can be borrowed (with interest).

Types of Permanent Insurance:

• Whole life:
  • Joint whole life: This type of insurance guarantees the coverages of two lives as opposed to one. The insurance is paid to the surviving member after the death of the other. This is commonly bought by married couples.
  • Survivorship life: This insurance also covers two lives but is meant to be paid out after both have died. This is commonly bought by couples who want debts to be paid post death. This can be a way to ensure that children do not have to pay outstanding debts.
• Universal life: This is an insurance that is driven by interest. The insurance will pay a guaranteed interest, commonly 4-4.5%.
• Variable life: This insurance can contain death benefits as well as cash payout. However, the insurance is based on the investments selected by the buyer. Meaning, payout can fluctuate and may only need to pay out a minimum.
• Variable Universal: This insurance combines universal life with the possibility of fluctuation in variable life.

Annuities

Annuities are a great option for anyone that will not receive a pension after retirement. Annuities become personal pensions that ensure you have income to live off of after retirement.

Types of Annuities:

• Fixed Annuities: This option takes the money that you give the insurance company and the company invests it. The company gets to choose how the money is invested. Once annuitization (stream of income) happens, the fixed dollar amount that was agreed upon will go to you.
• Variable Annuities: This option allows you to pick from various investment options. These can include bond funds, mutual funds, or money market accounts. Because of the ability to fluctuate there is usually a fixed minimum that will be paid at death.
• Equity-indexed Annuities: This option deals with stock investment. The performance of stock is tracked, and you are guaranteed a set minimum.

Things to consider:

• Annuities are investments and given by insurance companies. So, although there is a chance for a great payout there are funds and fees that need to be applied before you see that money.

Annuities are complicated. Be sure that you understand the investment and risk process along with the fees that go along with it before you sign anything.