What is Life Insurance and How Does It Protect Myself and My Family? - United Benefits

What is Life Insurance and How Does It Protect Myself and My Family?

What is Life Insurance?

Life Insurance is an insurance policy. in You pay a small premium amount at a certain frequency and in return the insurance carrier agrees to pay a large sum to your beneficiaries in the event of your death. This tax-free lump sum will:

  • Assist your beneficiaries in covering your final expenses
  • Provide income protection
  • Assist in estate planning
  • Act as mortgage protection
  • Assist in legacy purposes for your family and beneficiaries

There are three main types of life insurance policies which all offer unique strengths and benefits. Let’s explore the differences below to figure out which one is right for you.

Term Life Insurance

Term life insurance covers your life for a certain “term” or period which you select. These terms can be as short as one year or as long as 30 years (or even longer!). Term life insurance is the most cost effective of the three main types of life insurance since it only pays out if the insured dies during the term of the policy.

Term Life Insurance works well for mortgage protection or income replacement, especially if you have young children or dependents. Under these circumstances, a term plan for a period until your children reach maturity and can earn their own way may be a good option to ensure that they are adequately provided for in the event of your death.

Whole Life Insurance

Whole life insurance, also known as traditional life, is designed to cover you up to 100 years of age after which the policy will be completed and paid out to you. Unlike term life insurance, whole life insurance never expires and the benefit payed to your beneficiary will be payed upon your death no matter how long you live.

This policy also builds a cash value which is a great resource for retirement planning and wealth building. If you choose a policy under a mutual company, such as Mass Mutual, the policy may also pay dividends directly to you. The premium for whole life is locked in and will never change as long as you have the policy, which makes it a great option for legacy planning, covering final expenses, and retirement planning.

Universal Life Insurance

Universal life insurance is also referred to as a flexible premium plan. It is a hybrid type of life insurance that can be built to run as a term or whole life plan.  Universal life plans are extremely customizable and can be designed to cover you for 10 years or 100 years. Reasons for choosing universal life are its flexibility and ability to be used like a whole or term policy making it an all-purpose solution for your needs. A Fixed Index Universal Life Plan is an excellent choice if you’re trying to build your retirement income tax-free.

Do you know which life insurance plans is best for you and your family?

When purchasing life insurance there are many factors you must consider in order to have adequate coverage for you and your family’s needs. You may ask yourself questions like:

  • Who is depending on my income?
  • Who would be responsible for my final expenses when I pass away?
  • How can I use life insurance as a retirement tool?
  • What life insurance is best for my needs?
  • How much coverage is required to provide for my family?

Deciding on a plan can be very intimidating. We are here to help! United Benefits can guide you through the entire process, help you explore the various options, and ensure that you get the best coverage for your specific needs. Fill out the form below to schedule a free consultation.

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