Life Insurance

Life insurance is a form of insurance that pays a beneficiary in the event of someone's death. At the time of purchase you buy a specific amount of coverage for a specific length of time. Should you die during the term of the policy, your beneficiary will receive the specific amount that the coverage stipulates in the policy documents. There are two basic types of life insurance. Term Insurance and Permanent Insurance also called Whole Life or Universal Life .

Term Insurance

Term insurance is sometimes referred to as temporary insurance. It provides coverage for a person against death for a specific time, the term. Term coverage can be issued for 1, 5, 10, 15 20 and some new policies can even extend to 30 years. If death occurs during the term, the policy pays a cash benefit to the beneficiary. If death occurs after the expiration of the policy (after the term), no cash benefits are paid out.

Term insurance is the most easily understood, straight forward type of insurance. This is quite different than "permanent insurance" since term insurance has no investment value and most of your premium dollar goes to pay for coverage. Term policies are quite flexible in that you can decide a term that's right for you. Some clients prefer to be covered until retirement, while others insure themselves until their children are out of college. The one common length that all would agree to is to provide coverage until your youngest child is 18.

Whole Life or Universal Life

Whole life or universal life is often called permanent insurance. This type of policy never expires, providing you pay the premiums. It provides coverage the same way that term insurance does, but in addition it also provides an investment component. Part of the premiums that are paid cover the cost of insurance and another part of the premium goes toward an investment account. The investment portion can be held in stocks, bonds or an interest bearing account.

Which is better?

In our opinion, and this may not be the opinion of your current agent, young families that have large financial obligations may fare far better with term insurance. When your investing for growth, place your money in a Mutual Funds, Money Market accounts, stocks, or traditional savings vehicles. This type of discretionary income investment is likely to generate returns at least similar and in many cases much better than life insurance. The exception to this would be for people who have an estate that exceeds $500,000 and who wish to shelter their assets from estate taxes. Another example may be for younger families who may have just finished school and feel the need for both or who plan to hold the policy for 20, 30 or more years.

Disability Insurance

Because of advances in medicine, suffering from a permanent disability may be far more probable in today's society than actually dying prematurely. This fact alone should make investigating a good quality disability policy a priority.

The purpose of disability insurance is to replace your income in the event you become disabled and were unable to work. Today many employers provide some form of disability insurance but you need to review the employer options very carefully. In many cases supplementing the employer provided policy is a wise investment. As with other types of insurance, premiums are determined by a combination of age, sex, income and your occupation. The typical coverage amount will range from 50% to 70% of your monthly income.

Long Term Care Insurance

This is one of the fastest growing healthcare products available today. The purpose of long term care insurance is to provide protection to you if you or your spouse were to be admitted to a nursing home. Long term care insurance provides protection in the event of such a loss or event.

Business Insurance

Many businesses provide his or her employees with health insurance, life insurance and even disability insurance. The benefits to the employer for such an offering include:

• Employer sponsored benefits helps retain employees
• Many group sponsored programs are less costly and provide broader coverage than individual policies

A business might also need more specialized life insurance products to protect the interests of the business, such as Key Man Insurance or Buy-Sell agreements.

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