The need and uses for Life Insurance are as varied as the people that purchase it. Determining how much life insurance, or the type of life insurance, someone should have can be a very simple discussion but more often it involves an in depth consideration of several factors. Unless the need is very specific and therefore very clear we recommend clients discuss the complex issue of life insurance with a licensed professional like Fraleigh and Rakow.
In general there are two types of life insurance, term and permanent
Term Life Insurance – This is the most affordable and most simple form and it is exactly what the name implies. It is an agreement between the insurance company and the insured to provide a fixed amount of death benefit for a set term. When that time is up the contract lapses and there is no further obligation to provide the death benefit or to pay a premium. Typical uses for term life insurance are to guarantee the payment of a mortgage or business loan during the set period of obligation. Term Life insurance is also frequently used to buy the maximum death benefit for the minimum premium by a family provider with young children.
Permanent Life Insurance – This is a contract that once signed will provide a death benefit for a lifetime as long as the insured continues to pay the premium. Although more expensive at the time it can actually be cheaper in the long run. Permanent insurance typically accumulates a cash value that may eventually surpass the total premiums paid into the policy. That cash value can be used to pay the premiums or the owner may chose to withdraw or borrow portions of it. Typical uses for permanent life insurance are income replacement, wealth and business transfer and estate planning.
Come in or call or email Fraleigh and Rakow for further education on the intricacies of your insurance plan and more importantly YOUR needs.