Financial planning, whether for your family or your business, is all about making sure that today’s obligations are met and tomorrow’s goals become reality. Your plan for ensuring that the financial resources are available when they’re needed, regardless of what the future may bring, starts with a solid foundation. The foundation of many financial plans is life insurance.
Life insurance provides cash to your family when they need it most…in the event of your death. The income-tax-free death benefit of your policy is an important financial resource that can help:
- Pay the mortgage
- Support the household
- Ensure that your dependents won’t be burdened by debt
There are two basic types of life insurance, term and permanent.
With term life insurance you are protected for a specific period of time only, usually 10 or 20 years. The death benefit is paid only if you should die during that period of time. The premium amount is usually guaranteed not to increase during the term you choose. Term policies do not have any cash value.
For needs that you expect to disappear over time, like automobile payments or other short-term debts, term life insurance can keep your family from having to liquidate assets to pay debts or bills.
Who needs Term Life Insurance?
- Young couples with or without families who need to protect their future earnings potential
- Anyone with others depending on them for support
- Business owners with a need to ensure the continuation of their businesses through buy-sell agreements
- Professionals with temporary death benefit protection needs such as short-term debt or cash shortfall
- Anyone with employer group insurance needing the portability provided by an individual term life insurance policy
Permanent life insurance is lifelong insurance protection, with additional financial benefits such as cash value accumulation and the ability to borrow on the cash value of the policy.
Who needs Permanent Life Insurance?
Individuals who have a permanent need for funds to replace lost income for:
- Mortgage payments
- Education costs
- Child care costs
- Other debts and obligations
Business owners who:
- Need to fund buy-sell agreements and want the flexibility to address wealth transfer needs in the future
- Want informally-funded non-qualified alternatives to help employees supplement future cash flow needs on a tax-advantaged basis
VUL (Variable Universal Life)
VUL is a type of permanent life insurance that pays a death benefit as long as there is sufficient value in the policy and, the policy is not allowed to lapse. Your premiums, net of expenses and charges for providing life insurance protection, are invested in your choice of sub-accounts, where all growth is tax-deferred. As the policy owner, you have access to the policy’s account value through policy loans and withdrawals.
Who should consider VUL?
- Want to help supplement cash flow needs
- Have a permanent need for the death benefit protection offered by VUL insurance
- Have maximized traditional retirement vehicles
- Cannot qualify for a Roth IRA due to high level of income
- Want options for accessing cash value without penalty prior to age 59½ or when qualified benefits become available
Business Owners who:
- Wish to provide key employees with needed pre-retirement death benefit protection and incentives to remain with the business as part of an executive benefit plan
- Can reposition assets for other cash flow needs
- Do not want to set up a qualified plan or who want to eliminate the costs and administrative restrictions of a formalized qualified plan
- Want to be able to access cash values via tax-free loans and tax-advantaged withdrawals
So, whether you have a current need for life insurance, or have purchased life insurance in the past and would like a free review, call Randy Teegardin at (269) 945-2401. He will review your current needs for life insurance, as well as examine any current policies to help you determine the most efficient and effective plan to meet your individual needs.