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LIFE INSURANCE

 

The Family Need…

 

Life insurance is a necessity that few should live without. The death of a loved one can not only cause emotional loss, but can cause substantial financial loss. With the loss of an economic provider, a family may not be able to sustain its standard of living. Mortgage payments, automobile loans, credit cards, and other debts may be overwhelming for the remaining family members. A well-organized life insurance program can give a family peace of mind.

 

Mortgage Protection Needs:

For most families, their home is the largest and most important financial investment.  A home represents the family's financial foundation.  Your home is not only an asset but it is the cornerstone of your family.  The loss of an income provider is not only emotionally devastating, but it can put a financial strain on the remaining family members.   The unexpected loss of income can put your home in jeopardy.  Without the ability to make the mortgage payments, your home can be at risk for foreclosure.  Mortgage protection insurance is specifically designed to pay off the mortgage debt in the event of a death or help make the mortgage payments in the event of disability.  Most mortgage protection plans can be customized to fit every mortgage need, and can present an affordable solution.

 

Parenting Needs:

Families represent the closest bond that can be achieved between two people. With the birth of a child, special financial needs arise.  The responsibility of caring for the family grows considerably.  The loss of a parent can cause unforeseen strain on the surviving parent.  Not only does the widowed parent have to raise the child alone, but the parent inherits all the financial responsibilities.  Baby sitting, clothing, medical, and college funding are just a few of the many needs.  These responsibilities can often become overwhelming and may damage to the families social and economic status.  A well planned life insurance program can protect a family's well being, while giving each family member peace of mind.

 

 

Business Needs…

 

Businesses have special life insurance needs, to protect or conserve the assets of a business in the event of an unforeseen death.  Every businesses need is different depending on the structure of the organization.  Two of the most common needs are key employee or buy-sell needs.

 

Key Employee Needs:

Many businesses rely on a few employees to keep the business running.  These employees may be top sales reps, company key executives, department heads, or any other persons whose sudden loss would cause the business to suffer a financial loss.  These employees are KEY to the business.  Key employee life insurance plans protect the business in the event of the death of the key employee.  With key employee insurance, the business is given a financial buffer so that it may find a replacement.

 

Buy Sell Needs:

Many small business corporations are owned by a few stockholders which control the business.  Unfortunately, upon death of a stockholder, the shares of stock in the business pass on to the shareholder's estate (often a spouse or children).  The remaining owners of the business may feel uncomfortable managing the business with inexperienced or uninterested shareholders.  A buy-sell agreement is a legal document giving the right of purchase of the deceased shares to the remaining shareholders.  In order to fund the purchase price, the shareholder or the corporation, may purchase life insurance policies on the lives of the other shareholders to the agreement.  Upon the death of a shareholder, the life insurance policy pays the death proceeds to the remaining shareholders, so that they can purchase the shares of the deceased shareholder.

 

 

Two basic types of Life Insurance

 

Life insurance policies come in many different forms and plans; each which are specifically designed to meet individual client needs. With all the variety in policy types there are two basic forms:  permanent and term life Insurance.

 

Permanent Life Insurance

Permanent life insurance plans include universal life, whole life, adjustable life, and variable life. These plans are designed to give clients life insurance coverage that can last permanently throughout the policy holders life. Policyholders paying a consistent premium are able to keep a permanent policy in force, until the policyholder chooses to cancel coverage or until death. With permanent life insurance, policyholders pay a higher premium in the first few years. Portions of the premiums being paid into the policy accumulate tax-deferred interest. As the policy ages, the value helps keep the policyholder's payments level. With most permanent life insurance policies, the policyholder can surrender the policy at any time and claim the policy's cash value (a policies account value minus any surrender charges).

 

Term Life Insurance

Term life insurance plans offer life insurance coverage for a certain number of years. Most term policies offer 1, 5, 10, 15, 20 or 30-year plans. Because term life insurance policies offer coverage for a fixed period of time, term insurance is typically less expensive than permanent coverage. Policyholders can receive high coverage amounts for a fraction of the cost for permanent coverage. Term insurance can be a favorable alternative for clients needing life insurance for a short period of time (less than 30 years).

 

Term VS. Permanent

Many financial planners have often preached "Buy Term, Invest The Difference". This is a simple and often incorrect viewpoint. Although term insurance can initially be less expensive, it may not be the most economical choice in the long term. The truth is, there is no BEST type of insurance policy. Every client has a different financial situation and financial need. The best insurance plan is the one that fits the need best.