Who needs life insurance? Typically, you should purchase life insurance for one of two reasons: You owe someone or you love someone.
If either of these reasons apply to you, the next question is often “How much is enough?” The answer can be simple in some cases and very complicated in others because everyone’s situation is unique. A recently married couple with no children has different needs than a family with two small children who need money to be nurtured and maybe later on for education.
To understand how to calculate the appropriate amount of Life Insurance and the issues to consider, visit lifehappens.org. Under the “Calculator” menu, click on the “Life Insurance” calculator. This will allow you to input different variables to get an idea of what is right for you based on what’s important to you.
There are different kinds of Life Insurance contracts. Below is a brief description of the major categories:
Term Life Insurance: This type of coverage provides life insurance at a fixed premium for a specified time period. These plans may be convertible to permanent life insurance plans in the future. Reasons to purchase term life insurance include paying off student loans, providing income to the family, paying consumer debt/mortgages, and providing education funding for children. Advantages: You can get a lot of coverage for lower premiums compared to a permanent life policy.
Permanent Life Insurance: This type of coverage gives you
The different types of permanent life insurance are:
- Whole Life Insurance: This coverage provides guarantees for the death benefit and the cash values. A Mutual company (one without stockholders) also will provide dividends that are added to the policy to increase the guaranteed cash value and ultimately increase the amount of guaranteed death benefit.
Advantages: Provides guarantees for both death benefit and cash value. Cash value builds on a tax-deferred basis.
- Universal Life Insurance: This coverage provides permanent protection for the death benefit and allows flexibility in premium payments. This is attractive for people who may want to put more money into their accumulation fund in some years and reduce or eliminate premium payments at some point in the future.
Advantages: Flexibility in premiums as well as death benefits. Cash value builds on a tax-deferred basis.
For more information, email us at insurance@wismedassure.org, call 608.442.3810, or use this online contact form.