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What You Should Know about Life Insurance

Life insurance is financial stability for you, your family and loved ones. A life insurance policy helps to ensure that your dependents will have the financial resources needed to protect the home and the income needed to run a household when you die.

Life insurance is financial protection. The number one reason most people purchase life insurance is to replace income that would be lost with the death of a wage earner. A most important feature of life insurance is that the proceeds are tax-free. Life insurance can play an important role in estate planning, cash accumulation, retirement funding, and the transfer of wealth to your beneficiaries.

Term or Permanent: What Type of Life Insurance is Best?
Life insurance is a long-term commitment and before buying any life insurance, you should ask yourself a few very important questions:

         How much insurance do I need? What would my dependents need to live comfortably if I should die? How much can I afford to pay for a policy? Can I afford the premiums for the life insurance I need?

         Am I looking at life insurance to offer more than replacement of wages or income? Am I looking for ways to fund future education costs, to pay estate taxes, to supplement retirement or fund emergencies?

        Is the life insurance company I am considering financially secure? How is the company rated by industry experts, does the company have an acceptable claims payment history, and competitive prices?

Term Life Insurance
Term life insurance provides protection for a limited period of time and pays benefits only if you die during the specified term. Term life is often referred to as temporary insurance. Term policies do not accumulate cash value, but it is becoming more common for companies to offer conversion privileges to permanent policies within a pre-determined period. Accumulation of cash value occurs in life insurance policies where a portion of the premium paid is used to build up cash with interest.

Benefits of Term Life Insurance

       Cost less than permanent insurance.

         While term policies are in effect, you are typically offered the right to convert to a permanent policy without evidence of insurability, the statement of information required by insurance companies that proves you are an insurable risk.

         You can purchase a large amount of term insurance to complement your permanent policy at the lowest possible cost.

Permanent Life Insurance

Permanent life insurance provides lifetime protection as long as your premiums are paid timely. Permanent insurance offers opportunity to build cash value over time. You can use your insurance cash value to take out a loan for emergencies, fund a major purchase, or send your child to college.

         Benefits of Permanent Life Insurance

        Premiums remain constant over the lifetime of the policyholder.

        Death benefits to be paid no matter when you die. Some insurance companies allow death benefits to be advanced to provide for nursing care and expenses for terminal illnesses.

        Opportunity to accumulate cash value, tax deferred.

         Opportunity to withdrawal or borrow accumulated cash value.