THE INSURANCE SERIES | PART 2
Today, I want to talk to you about Life Insurance.
Life insurance has multiple uses, including charitable giving, covering your heirs estate taxes upon your death if you have significant assets, and even building cash value for the purposes of saving for college and retirement.
But for the purpose of today’s discussion, we will be focusing on life insurance as income replacement in the untimely and unfortunate death of either yourself or a loved one. If you are dependent on someone’s income, or someone is dependent on your income, and there aren’t enough assets to replace that income in case of a death, you may be a likely candidate for life insurance.
There are many types of life insurance, including term, which is only in place for a certain amount of years. For example, until your children are grown or until you are of retirement age. Permanent insurance, which you may have heard called “whole life insurance”, typically lasts into old age as long as you pay your premium, and may also build cash value depending on the type of policy you have.
Deciding which type, and how much life insurance to purchase is a personal choice. There is no one size fits all. Some people like to have enough coverage to make sure their spouse could pay off the mortgage and possibly put their children through college. Others may prefer to cover their spouse’s expenses for one to two years after a death. And sometimes it simply comes down to cost and what is affordable for your budget. Being a non-smoker, and in general good health, will greatly reduce your costs. But you may be surprised, even if you have health problems (past or present), you may still qualify. There is no harm in applying, as you do not have to accept and pay for the policy if it ends up being out of your price range.
Remember that as life changes, it may also be important to update your current policy, or get additional life insurance. For example, if you have recently gotten married, or after the birth of a child. Life insurance policies should be reviewed annually as part of your financial plan to see if any changes need to be made.
If you have life insurance, and you aren’t quite sure exactly which type and how much you have, I am happy to help you dive into the details of your policy with you. Or, maybe you aren’t sure if you are paying a fair price, or whether to get life insurance independently or through your employer. I can help you answer those questions as well. As always, please reach out with any questions you may have!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. We suggest that you discuss your specific situation with your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.
Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.
Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets.
All investing involves risk including loss of principal. No strategy assures success or protects against loss.