People buy life insurance to protect those left behind in the wake of an untimely death. Whether it’s to assure that a son or daughter goes to college or to assure the comfort and safety of a spouse, life insurance is essential to assure that your dreams become a reality – whether you’re here or not.
Why Term Life Insurance?
Life Insurance could be the right choice for you if you need coverage for a set time. Term insurance is typically more economical. Coverage ends when the term expires. Choose a 5-, 10-, 15-, 20- or 30-year term based on your specific needs and your vision of the years ahead.
Term Life Insurance is intended to help replace lost income and cover needs that will go away over time. It is insurance for a specific number of years. Most policies have coverage that will not change for the length of the term selected. Many proprietary content term insurance policies have an option that allows you to convert to a permanent policy without a medical exam.
A Financial Advisor located at North County Credit Union can help you to determine if term life insurance is right for you.
How Does Whole Life Differ From Term Life?
Unlike term insurance, whole life offers coverage for your entire life. And it accumulates cash value, which is accessible in the form of loans or withdrawals. So whole life can represent a future source of money as well as protection. The premiums are guaranteed to remain the same throughout your lifetime.
Coverage to Benefit Varying Ages and Family Situations
Whole life coverage can be a beneficial option for an array of ages and family situations:
- Customers of all ages may be eligible to apply (depending on the product offered).
- Children and grandchildren benefit because the policy is designed for lower premiums at a young age, and the premium remains level.
- Young families with limited premium dollars benefit because it provides a simple insurance plan offering financial security and cash values.
- More mature customers benefit because of tax-favored accumulation of cash value and life insurance coverage.
- Premiums are paid over your lifetime, or a shorter period, depending on the product offered.
Accumulation of Cash Values
Cash values accumulate at a fixed rate. The cash value can be used to purchase extended term insurance, or to purchase paid-up insurance, or the policy can be surrendered for its cash value.
A Financial Advisor located at North County Credit Union can help you to determine if whole life insurance is right for you.
Reasons to buy Life Insurance
- Helps you prepare for the unexpected (such as death or a loss of a job).
- Designed to safeguard growing financial commitments (marriage, children, mortgage, etc.).
- Helps to protect loved ones if you and/or your spouse should die prematurely.
- Can build and protect funds for a child’s college education.
- Can accumulate and secure money for retirement.
- A way to leave money to charity.
What is the difference between term and whole life insurance?
Term Life Insurance
- Can provide affordable, high-coverage protection for a specific period of time.
- Proceeds are paid if you die during the term.
- Premiums and benefits may be either level or decreasing.
Whole Life Insurance
- Offers coverage for your entire life.
- Premiums remain level, the same throughout your lifetime.
- Policy loans can provide a future source of money.
- Policies loans incur interest and any unpaid loans decrease the death benefit.
What type of insurance do I need?
There are obvious advantages to both term and whole life insurance. You may need both. And you may want to supplement your current coverage. So how do you know which coverage is right for your situation? We don’t expect you to be the expert. A Financial Advisor located at North County Credit Union can help you go through all the options so you can choose what’s best for you.
How much life insurance do I need?
A general guideline is five to ten times your current salary. (This current recommendation represents the sum total of all life insurance policies and is only a general guideline. The amount of coverage you need will depend on your needs and circumstances.)
Questions you may want to consider when determining your particular family’s life insurance needs are:
- Do you have a financial plan to pay for your children’s education?
- Do you have a savings plan to help cover financial emergencies?
- If your family were to lose an income, would the other family members be able to maintain their lifestyle? Would your (and/or your spouse’s) survivors be able to stay in your home and pay the mortgage? If necessary, what would your family do for childcare?
- If you or your spouse were to die suddenly, would your family be burdened by large debts?
What do I need to know about beneficiaries?
- A beneficiary is a person or organization (e.g., charity) who receives insurance benefits at the time of the insured person’s death.
- You can choose anyone to be your beneficiary and you can have more than one beneficiary.
- In general, benefits paid to your beneficiary, are not subject to federal income tax.
A Financial Advisor located at North County Credit Union can help you determine what kind of life insurance is right for you.