Life Insurance Products
You may have begun this site exploring our thoughts about growing your retirement, or cutting your healthcare costs, or the important topic of “what do I do if or when I become ill?” But, what about life insurance?
Do you really understand it’s purpose?
Without a doubt, all these issues are key to a solid financial plan for life. For many of us, we don’t always have the “estate” of the big boys. Maybe we are just starting out in life, or over the course of our lives, we really have not been able to save and plan for our families’ protection after we are gone. Regardless of the size of your “estate” or your “legacy”, we all have a need for a solid plan to protect what we do have, and to provide for those we leave behind.
That is where life insurance, estate planning, and tax planning all come in.
The Basics of Life Insurance
Specifically, the goal of life insurance is to provide a measure of financial security for your family after you die. So, before purchasing a life insurance policy, you should consider your financial situation and the standard of living you want to maintain for your dependents or survivors. For example, who will be responsible for your funeral costs and final medical bills? Would your family have to relocate? Will there be adequate funds for future or ongoing expenses such as daycare, mortgage payments and college? It is prudent to re-evaluate your life insurance policies annually or when you experience a major life event like marriage, divorce, the birth or adoption of a child, or purchase of a major item such as a house or business.
Three General Types of Life Insurance
There are three general categories or types of Life Insurance; each with it’s own purpose.
- Term Life Insurance – Also referred to as “pure insurance” because it does not build any cash value.
- Whole Life Insurance (Universal Life & Variable Life)
- “Final Expense” Life Insurance
Estate planning is an ongoing process and should be started as soon as one has any measurable asset base. As life progresses and goals shift, the estate plan should move to be in line with new goals. Lack of adequate estate planning can cause undue financial burdens to loved ones (estate taxes can run higher than 40%), so at the very least a will should be set up even if the taxable estate is not large.
Tax planning goes way beyond the annual IRS income tax blahs. And, some of this topic, bleeds over into the “estate planning” area, but not completely. Having a solid estate plan is critical to those of us that have sizable estates, but for the rest of us, it’s a little less crucial. We can however at least be “tax consequence” conscience when we think about our investing and our insurance, and how our family will benefit by our decisions.
Is taxable or tax-deferred better? What’s the different between “qualified” and “non-qualified” contributions?
These are the kinds of topics (and many more that we all need qualified professions advising us on.
For help with all your life insurance needs, contact us.