Life Insurance
Life can take unexpected and unfortunate turns. If you have a family or significant other, it is advised to purchase life insurance sooner rather than later to extend the financial safety net to your loved ones as well as getting a better rate (as the younger the age a policy is taken out, the less the premiums are). Life insurance is here to protect your family or business in case of unforeseen circumstances and will be one of the best financial investments you can make.
What Is Life Insurance?
Life insurance is an agreement between the insurer (the insurance company) and a policyholder in which the insurer will pay a death benefit to the named beneficiaries if the insured passes away during the policy term.
Although there are different types of life insurance, they all contain these components:
- Policyholder: The owner of the life insurance policy.
- Insurer: The company who issues and holds the life policy.
- Insured: The person who the life policy is on. (In most cases the insured is also the policy owner.)
- Beneficiary: A beneficiary is the person, group of people, or institution that will receive the money if the insured person passes away.
- Premium: The money paid annually, semi-annually, monthly or quarterly to keep the policy active.
- Death benefit: This is the amount of insurance (listed on the policy – i.e. $500k) that will be paid out to the named beneficiaries in the event the insured passes away during the term of the policy.
What Are the Benefits of Life Insurance?
Life insurance is something that most people feel uncomfortable talking about, but investing in a quality life insurance policy can help ensure your finances are allocated to those you love.
It should be something you consider if you want to leave a financial safety net for the ones you cherish.
Some benefits of life insurance include:
- The ability to create an income stream for your family, which gives you peace of mind knowing they will have some financial stability.
- You can pay off debt such as a mortgage, credit cards, loans, etc.
- Funds can be used to cover funeral expenses.
- An inheritance can be left to loved ones.
- If you leave behind children, funds can be allocated toward their college education.
- Death benefits are generally paid out income-tax free to the beneficiaries.
Our team of insurance professionals at Gallant Risk & Insurance Services, Inc., is committed to providing you with enough knowledge to choose the right life insurance for you. Request a quote for life insurance today.
What Are Some Types of Life Insurance?
Gallant Risk and Insurance Services, Inc., offers several different coverage options for your consideration: Term Life, Whole Life and Universal Life.
Term Life
Term Life insurance is one of the most popular and affordable life insurance options. Term Life lasts for a set number of years before it expires. You can set the term anywhere from 10 to 40 years and pay a monthly or annual fee to keep the policy active. (One and Five years terms may also be available)
The two types of Term Life Insurance are:
- Annual Renewable Term: Term Life insurance is purchased for one year and if the policyholder passes during the term, the listed beneficiaries will be out the amount of the death benefit.
- Level Term Life: Term Life insurance can be purchased for as long as 10 to 30 years and remains active if premium payments are being paid on time.
Whole Life
In certain circumstances, permanent life insurance may be advised.
Whole Life is different from term life insurance because it remains active for the insured’s life (as long as the premiums are being paid) and the policy also contains a cash building component.
When you pay your premium, a portion of your premium builds cash value, which can be borrowed against.
Universal Life
Universal Life Insurance is like Whole Life in that it has a cash building component and is a type of permanent life insurance policy.
Unlike the whole life policy, premium payments are flexible. Depending on changing financial circumstances, you may increase, decrease or even skip premium payments (changes to premium payments may depend on age of policy, death benefit amount and policy’s cash value). Any changes should be reviewed to see how it will affect the policy prior to making any changes.
Death benefits may also be adjusted (within the plan limits) without having to buy another policy. But an increase in the death benefit can result in an additional underwriting and/or another medical exam, depending on the policy guidelines and language.
Some Types of Universal Life Policies:
Traditional or Non-Guaranteed Universal Life: Interest rate for the cash building account are based on current market or the minimum guaranteed interest rate outlined in the policy (whichever is greater).
Indexed Universal Life (IUL): Gives option to tie the cash building account to a major stock market index such as the S&P 500 (or another stock market index). The interest crediting goes up or down in lockstep with the market index.
Variable Universal Life (VUL): Variable Universal Life insurance allows you to place the funds accrued in the cash value into a variable account that is composed of investment funds (mainly various kinds of mutual funds). You can invest & manage a variety of mutual funds inside the policy. VUL cash building account performance will be depend on the mutual fund performance.
Variable Universal Life
With a Variable Universal Life (VUL) Insurance policy, you get the same flexible benefits of Universal Life while being able to take advantage of potential economic growth in the stock market. Instead of creating a cash value for savings, the value of your VUL policy is invested in professionally managed funds that reflect the performance of the stock market. This also means that as the policy owner, you assume the risk and responsibility of monitoring your own investments.
Is Life Insurance a Requirement?
No, life insurance is not a requirement, but it is highly recommended.
You may find yourself in many situations that would be beneficial if you invested in life insurance, including:
- Financial protection/stability for your loved ones, including: income replacement, debt payoff, college tuition savings (for those who have kids that will be attending college one day)
- If you are a business owner and have a key employee or a partner that would result in increased company costs if they were to pass away. Funds from the death benefit could be used to offset those increased costs and would be payable to the company (as the beneficiary).
- Covering the cost of a funeral
- Creating an income tax free income stream to help with retirement
Have More Questions About Life Insurance?
If you want to request a quote for life insurance, call our Corona office at (951) 368-0700 or fill out our online contact form.
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