Maybe you’ve put off getting life insurance because you don’t want to think about it. But it’s very important for your financial planning to have insurance in place in case the unexpected should happen.
Why do you need life insurance? Simply, life insurance will protect the financial future of your loved ones should you die. The sum of money they receive can be used to pay off a mortgage, to help fund a child’s college education—any number of things.
Life insurance buyers need to do a financial fact sheet to assess their needs. You need to think about your long-term goals, what kind of insurance would be best throughout your lifetime, how much you save each year, your retirement plan, assets, debts and anything else that may affect the type of insurance you should get.
There are three basic types of life insurance. Here we’re going to break it down for you.
Term Life Insurance. This is the least expensive type of insurance which covers you for a limited period of time. Unlike other types of life insurance, there are no benefits given unless someone dies. A potential disadvantage—the premium is fixed, then goes up each year. When this happens, sometimes the insured can no longer afford it. But it is the least costly way to receive a substantial death benefit on a coverage amount.
Whole Life Insurance. This was a common type of insurance from 1940 to 1970 before more options became available. With this type of insurance, you can receive benefits while you’re still living. For example, someone with a terminal illness can access a large portion of benefits while they’re alive. It also secures your spouse’s income in case of an untimely death and can help with retirement costs. It includes a tax-sheltered cash account that builds up over time. No taxes are paid on gains each year, and the money can go to supplement your retirement. You’ll also receive dividends that can increase the cash in your policy.
Universal Life Insurance. This is a flexible, permanent life insurance that offers the best of both the other types of insurance. For instance, it is a low-cost option like term life insurance, and also includes a savings element like whole life insurance. Another advantage is a guaranteed level premium throughout your lifetime. That’s nice to know in case you’re worried about premium increases. Each month the cash value of the policy is credited with interest. This interest can be used to help pay your premium. The savings, death benefit and premium can be reviewed as your circumstances change throughout your lifetime.
Remember, the type of coverage you choose at one point in your life may not make sense as time goes on. That’s why it’s important to talk to professionals who can advise you on the best policies to suit your life and your financial situation.
At Zawada Insurance Agency, we’ll work with you to find the best, most affordable insurance coverage to fit you and your family’s needs.
Please contact Zawada Insurance Agency today at (508) 831-0133. We’re a family-owned and operated independent insurance agency, located in Worcester, Massachusetts, serving central Massachusetts and beyond.