Life Insurance
WHAT IS LIFE INSURANCE?
A life insurance policy is a contract with an insurance company. In exchange for premium payments, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries upon the insured’s death. Typically, life insurance is chosen based on the needs and goals of the owner. It’s important to note that death benefits from all types of life insurance are generally income tax-free. There are many varieties of life insurance. Some of the more common types are discussed below.
Types of Life Insurance
Final Expense
Also known as burial insurance or end-of-life insurance, a Final Expense Plan is an insurance policy that helps cover medical bills and funeral expenses facing a family after a loved one’s death. These options cost less than traditional insurance, and can be an affordable option for people on a fixed budget — such as seniors who want to plan for their end-of-life expenses. Most importantly, a Final Expense plan enables a client’s loved ones to handle funeral costs, medical bills, and any other financial obligations during a highly emotional time.
Term
Term Life Insurance provides a cheaper premium to get the most death benefit making it an excellent choice for most people. Term life insurance covers the policyholder for a specific amount of time, known as the term. The term lengths vary according to what the individual chooses. Term insurance options typically are offered in 10, 15, 20, 25, and 30 year terms, and premiums are level during the term period. Some carriers offer Annual Renewable Term coverage for one year at a time with premiums increasing each year.
Whole
A Whole Life Insurance policy provides lifelong protection and includes “cash value” which grows steadily throughout the life of the policy. The death benefit of a Whole Life policy is typically paid to the beneficiaries tax-free and the cash value grows tax deferred. If structured properly, a policyholder can take a tax-free loan against the cash value in their policy. This loan and interest will reduce the death benefit, if not repaid prior to death. The client can repay the loan at their discretion. Some policies allow the client to “withdraw” a portion of the cash value as well.
MORTGAGE PROTECTION
A home is one of the biggest purchases that someone can make, so many people decide to get Mortgage Protection Life Insurance, often as a Term Policy. This mortgage protection covers them in the event that they suddenly can’t pay their mortgage, in most cases due to death or sickness.
Cost of Mortgage Protection
How much a Mortgage Protection Policy costs can vary. It depends mostly on the client and can be pricier if they have health issues or use tobacco. The Fussell Group Insurance Advisors provides cost-effective options that will give their clients peace of mind, which comes from knowing your home is protected.
Disability Coverage
If the reason why a client can’t pay their mortgage is temporary, such as an injury or sickness, the insurance company may pay the client’s mortgage amount for a short period of time. Policies vary, but some will pay for up to two years. If looking to enroll in Mortgage Protection, ask your insurance agent about what plans are available and how long their coverage would extend in a temporary scenario.
Reason for Mortgage Protection
Death is one of the main reasons why a Mortgage Protection policy is used. If the primary provider of the family dies, their ability to make the mortgage payments dies with them. These policies are designed to pay off their mortgage and in some cases leave the surviving family members with a remaining death benefit.
