Life insurance isn’t for those who have died—it’s for those who are left behind. When shopping and researching various types of life insurance, ask yourself first: How much life insurance do I need and what would be the best life insurance policy for me and my family? You will want to consider needs such as replacing income so your family can maintain its standard of living, providing for college tuition costs, as well as paying for your funeral and estate costs. A general rule is that you should seek coverage between five and seven times your gross annual income. There are various types of life insurance policies as well as other life insurance types to consider such as burial insurance and longevity insurance. We will break them down for you here.
Term Life Insurance
What is term life insurance? Term life insurance generally provides coverage for a specified period of time and pays out a specified amount of coverage to your beneficiary only if you die within that time period. You pay the same amount of premium from the first day of the policy until the term ends. Once the term ends, the idea is that your need for life insurance is gone and therefore, your life insurance policy ends.
Permanent Life Insurance
Permanent life insurance, on the other hand, does not need to be renewed. A permanent insurance policy will stay permanently in effect for the rest of your life so long as premiums continue to be paid. Permanent insurance is typically more expensive than term insurance because with permanent life, the insurance company will need to pay out a death benefit even after you die. Therefore the premiums for this type of life insurance are generally higher.
Burial insurance is also referred to as “final expense insurance” as well as “senior life insurance.” Burial insurance is a more basic whole life insurance policy that covers only those costs related to death such as funeral, burial or cremation expenses. In addition, there is no medical exam to qualify. Burial insurance can be viewed like life insurance for seniors or for those individuals who may not pass a medical exam for other types of life insurance. However, be advised that these policies can be costly are often subject to a waiting period and other clauses by the insurer.
Perhaps you may have heard about longevity insurance and would like to know more about how it works. Longevity insurance is like an annuity contract, which will pay a benefit to a policyholder once he/she arrives to a pre-determined age such as age 80 or 85 and continue until death. These types of policies are attractive to some individuals who are concerned they may run out of retirement money by a certain age and may need additional income. You pay premium expenses to a life insurance company but instead of the insurer paying a death claim, you begin receiving annuity payments once you reach the established age set by the policy. These annuities can also be known as “reverse life insurance."
SHP Financial can work with you to help you determine the best life insurance policy for you and also make this a part of your overall retirement plan. To learn more or to speak with one of our financial advisors, please click here to complete a Consultation Request Form for a no-obligation, complimentary consultation, or call us at 508-746-2400 or toll free at 1-866-746-2401.
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