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Life Insurance Types

This web site is intended to be used as a tool to help teach the basics of different Life Insurance types and have this material available for easy reference. The following is an introduction:

The Basics

Why do I need Life Insurance?

Life insurance is an essential part of financial planning. One reason most people buy life insurance is to replace income that would be lost with the death of a wage earner. The cash provided by life insurance also can help ensure that your dependents are not burdened with significant debt when you die. Life insurance proceeds could mean your dependents will not have to sell assets to pay outstanding bills or taxes. An important feature of life insurance is that no income tax is payable on proceeds paid to beneficiaries. The death benefit of a life policy owned by a C corporation may be included in the calculation of the alternative minimum tax.

How much Insurance do I need?

Before buying life insurance, you should assemble personal financial information and review your family’s needs. There are a number of factors to consider when determining how much protection you should have. These include:

  • Any immediate needs at the time of death, such as final illness expenses, burial costs and estate taxes
  • Funds for a readjustment period, to finance a move or to provide time for family members to find a job
  • Ongoing financial needs, such as monthly bills and expenses, day-care costs, college tuition or retirement.

Although there is no substitute for a careful evaluation of the amount of coverage needed to meet your needs, one rule of thumb used is, buy life insurance that is equal to five to seven times annual gross income.

Choosing A Plan

Buying life insurance is not like any other purchase you will make. When you pay your premiums, you’re buying the future financial security of your family that only life insurance can provide. Among its many uses, life insurance helps ensure that, when you die, your dependents will have the financial resources needed to protect their home and the income needed to run a household.

Choosing a life insurance product is an important decision, but it often can be complicated. As with any other major purchase, it is important that you understand your needs and the options available to you.

The main types of life insurance available are term and permanent. Term Life insurance provides protection for a specified period of time. Permanent life insurance provides lifelong protection.

Special Notes:

  • The sale of duplicate Medicare Supplemental coverage is prohibited.
  • Your coverage can never be canceled because of your age, your health, or the number of claims you make as long as you make payments when due.
  • Consult your local insurance professional for specific information.

 

You can get even more information and additional points to consider about Life Insurance Types on our blog.

Life Insurance Types Part 2

Life Insurance Types Part 3

Please feel free to contact Heritage Companies if you need more information or Get a Term Life Quote now.

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