No matter what age you are, if you have people who depend on you for financial support, you need a full personal risk portfolio including life insurance. These offerings are really designed to protect and provide for your loved ones and dependents after your death.
At Cumbre Insurance, we understand that life insurance can be confusing, so here’s a rundown of the basics to prevent surprises upon a claim.
Types of Life Insurance
The two main types of life insurance are term and permanent.
Designed to cover the insured for a specific amount of time (usually 10 or 20 years), term life policies are often renewable. This is the simplest and generally the least expensive form of life insurance. The price does increase based upon the age and health at renewal and there is no cash value, meaning you cannot redeem the policy for cash. It is only paid to the listed beneficiaries when the insured dies.
All other types of life insurance are permanent, meaning the insured keeps the policy forever. The price never increases, and the benefit never decreases. These plans build a chase value in addition to the death benefit for the insured to use tax-free at their discretion.
Common types of permanent life insurance include:
Whole Life– These policies cover your entire life as long as you keep paying the premium. More expensive than term policies initially, the cost evens out because premiums never increase.
Universal Life– Similar to whole life, but with the potential for higher earnings on the savings component, this type is more flexible due to changing premiums and face values. There is usually a guaranteed return on the cash value. Disadvantages include higher fees and the possibility of increasing premiums.
Variable Life– Generally featuring fixed premiums, variable policies offer you control over the investment decisions for the cash value portion, but do not include cash value guarantees.
Selecting the right plan can be difficult. Many people decide based on an income replacement calculation, between 5 and 10 times the amount of your current income.
Consider your personal circumstances as well, including:
Is yours the sole income in your household?
Are there other expenses, such as college tuition, that may arise in the future?
Is there existing debt that may need to be covered?
Don’t forget to include potential medical and funeral costs. Above everything, you want to be sure your family does not get stuck with bills, debts, or expenses that they cannot afford.
Ask Your Risk Advisor
The risk advisors at Cumbre Insurance understand that every individual and family is different. That’s why we review your current situation and future goals to develop the best life insurance program for you and your lived ones. Contact us to start the conversation today.
Cumbre Insurance is a proud agency partner of Acrisure,a top 10 global insurance broker. Our relationship with Acrisure allows us to provide our clients access to policies, resources, and expertise often outside the reach of stand-alone agencies. Along with competitive pricing, our service is backed by dedicated, local customer service.