Life Insurance can protect you in more ways than just providing for your loved ones after you’re gone. At Penny Lane Financial we also focus on creating tax diversification to hedge against higher tax rates in the future while implementing strategies for business, charity and individual needs. Understanding the distribution side as well as the accumulation side of money, will not only position you on a path to better investing, but also on a path to a simpler and better life.
Life Insurance for protecting your family:
Provides for those that depend on you for their income
Relieves the burden of having to assume your debts without a way to pay them
Allows your family to stay in their home and keep the lifestyle they are accustomed to
Life Insurance living benefits:
Tax-free access to your cash accumulation
Protection against Market loss
Accelerated death benefits for critical, chronic or terminal illness.
Some things to ask yourself:
Who are my beneficiaries?
Have I set up my insurance to take care of my children if both my spouse and I pass away?
What is the death benefit? Will it cover my debts and my family’s needs comfortably?
Whole Life Insurance does not expire at a given age, and acts like an investment account with small returns. You can also “draw” on your whole life insurance policy if you need cash for a large or unexpected expense. As a result, Whole Life Insurance coverage is more expensive than its counterpart, Term Life Insurance.
Term Life Insurance costs less, but expires at a certain age, depending upon your policy. It was designed as an affordable alternative to Whole Life Insurance, since the insurer is betting that you won’t pass away at a young age, therefore it is less likely they will have to pay out before the policy expires.
Life Insurance as an Investment – Indexed Universal Life Insurance
Indexed Universal life (IULs) are a type of universal life policy. The universal portion means that premiums are flexible and the components of the life insurance policy (death benefit, savings element and premium) can be altered throughout the contract. Universal policies are also permanent insurance policies, like a whole life policy, although there are some major differences between universal life and whole life. One difference lies in the flexibility of universal life and the inflexibility of whole life.
Within universal life policies, there is a cash component as well as an insurance component. It is the cash component that makes IULs differ from VULs (Variable Universal life) and ULs (Universal life). The cash bucket inside of an indexed universal life policy grows as a result of index performance (and the indexes are usually selected by the client or advisor each year). The indexes will usually reflect broad market indexes like the S&P 500, DJIA, etc.
As with all contracts and policies there are many things to consider and understand. We want to educate you and help you to pick the right coverage for you and your family. No question is too small or unimportant. Give us a call. We’re here to help.