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Individual Life Insurance
You’re visiting this page for a reason. Maybe just curiosity about life insurance, but more likely because you’re concerned that you have financial responsibilities that must be honored in the event of your premature death. And you want and need to be assured that your loved ones and/or your estate will not bear that financial burden.
You’re definitely in the right place to find all that you need to get your questions answered, determine your specific life insurance needs and create an affordable package.
Another plus: enjoy peace of mind knowing you’ll be served by proven professionals backed by dedicated resources of a local, independently owned insurance services provider.
That means access to a vast array of insurance companies to match your unique needs and budget. Together, we’ll analyze your requirements and match solutions that work for you, always with an eye to maximize your protection and minimize your cost, just as we have successfully served hundreds of Virginians.
Why Consider Life Insurance Coverage
Long story short: life insurance provides a death benefit in the event of the insured’s death payable to one or more named beneficiaries. Depending on the purpose for the policy, death benefits may be paid as a lump sum, as monthly payments, as an annuity or some combination of these options. The choice of the form of payout will be to satisfy unpaid financial obligations, both current and longer term in the case of providing a source of ongoing revenue.
What types of expenses? Some examples:
- Funds to provide income for your dependents
- Pay off your home mortgage
- Repay outstanding debts, credit cards, etc.
- College education fund for your kids
- Provide funds to maintain your family business
- Discharge medical expenses
- Costs of final funeral expenses
- Leave an inheritance
- Provide a gift to your favorite non-profit entity
Your unique circumstances may reveal additional needs. Once you’ve decided on what financial responsibilities you’d like to have covered by life insurance, your next step is to determine how much you will need. That will help determine the type of policy to purchase.
What Type Of Life Insurance Is Right For You And Your Needs
Broadly speaking, life insurance policies come in one of two “flavors”: term and permanent insurance. What form is right for you is totally dependent on the amount of coverage (death benefit) you require and your budget to pay premiums. Here’s a rundown on the structure, purpose and benefits of each.
Note: Generally life insurance death benefits from all types of life insurance are income tax-free.
Term insurance provides protection for a specific period of time, such as ten or 20 years. As a frame of reference, think of your auto or homeowners insurance, both of which provide coverage for one year terms. When the term expires, so does your policy. With term life insurance, in the event of your death before the term ends, the policy pays the death benefit to your beneficiaries.
Three common term insurance periods are:
- Level Term: Your premium and death benefit remain the same for the entire term, e.g. 10 years.
- Annual Renewable Term: Your death benefit remains level for the entire year, but your premium will increase when you renew your coverage for another year.
- Decreasing Term: Your death benefit decreases each year while your premium remains the same.
Term insurance is advantageous if you know for what period you need the insurance. For example, a 30 year decreasing term policy to cover your outstanding mortgage is a predictable term requiring coverage.
Term insurance premiums are significantly less expensive than permanent insurance, especially if you’re relatively young and healthy. Therefore, term insurance is often the preferred choice based on the amount of insurance you need and your available budget to pay for it.
- Whole Life Insurance: As the name implies, whole life insurance provides lifetime coverage. That means it will remain in force for as long as you live. There are two components to whole life insurance: premiums and cash values. Premiums are typically fixed and therefore remain unchanged for the life of the policy.
That said, whole life premiums are significantly more than you will pay for term insurance coverage. That extra cost is because the policy is guaranteed to stay in force so long as you pay your premiums. Plus, a portion of your premium payments are allocated to cash values. Cash values are a savings component that accumulates tax-deferred. As such, you are able to access these funds via policy loans or withdrawals when needed.
- Universal Life Insurance: Universal life insurance is a type of permanent insurance that covers you for your entire lifetime with a cash-value component as does a whole life policy. However, universal life offers additional flexibility when compared to either term or whole life: you can change the premium amount and death benefit amount without having to qualify for a new policy. If your financial situation changes, the ability to change the death benefit amount within your policy is appealing and is one of the main selling points of a universal policy.
Here’s a quick comparison of the main benefits of term, whole life and universal life policies.
|Needs it helps meet||Income replacement during working years||Wealth transfer, income protection and some designs focus on tax-deferred wealth accumulation||Wealth transfer, preservation and, tax-deferred wealth accumulation|
|Protection period||Designed for a specific period (usually a number of years)||Flexible; generally, for a lifetime||For a lifetime|
|Cost differences||Typically less expensive than permanent||Generally more expensive than term||Generally more expensive than term|
|Premiums||Typically fixed||Flexible||Typically flexible|
|Proceeds paid to beneficiaries||Yes, generally income tax-free||Yes, generally income tax-free||Yes, generally income tax-free|
|May help build equity||No||Yes||Yes|
Insurance companies use rate classes to determine your premium payments based on risk-related categories. For example, your rate class will be determined by your overall health, lifestyle, family medical history and age. Your underlying costs are based on actuarial tables that project your life expectancy. High-risk individuals (smokers, overweight or those engaged in a dangerous occupation or hobby) will pay more.
Small Group Life Insurance
If your employer offers a group life insurance plan, you will likely benefit from this as the least expensive death benefit coverage you can buy.
Typically, group life insurance provides term policy benefits for as long as you work for that employer.
Note: Don’t ignore your need to purchase your own life insurance that will provide protection regardless of where you are employed.
Group-term life insurance can be offered to employees only, not to their spouses and children.
You may choose to offer life insurance benefits to your employees under a group insurance plan. If you choose to do so, you will have some qualifying restrictions to observe including whom to cover and the type and amount of coverage to offer.
If you want to take advantage of deducting the cost of premiums, you will need to comply with special nondiscrimination requirements. Generally, nondiscrimination requirements are designed to discourage you from providing benefits only to the most highly compensated employees or providing benefits that limit lower compensated employees from participating because of the price of the benefits.
Your best bet is to contact us for a comprehensive review of current nondiscrimination requirements.