Choose Life Insurance Wisely - Their Future And Your Peace Of Mind Depends On It

Let’s face it. Life insurance is a topic most people would rather avoid. Discussing it forces us to contemplate the inevitability of death, but planning for our family’s financial security is a responsibility we cannot avoid.

Purpose of Life Insurance
According to TrustedChoice.com, average life expectancy in Florida is 79.1 years. That’s higher than the overall life expectancy in the United States, reflective of Florida’s burgeoning retirement population.
Regardless of when death occurs, when we are gone, those we leave behind must carry on with their lives. The death benefits from life insurance policies are commonly used to:

• Replace lost income and future earnings
• Fund retirement
• Pay off loans and mortgages
• Pay for education
• Protect businesses in the event of the death of a partner or owner

The most basic purpose of life insurance is to replace income or assets that families rely upon to maintain their quality of life. Every spouse and person with dependents should be insured to the extent possible to provide for the financial security of those who depend on them.
Types of Life Insurance
Life insurance is a contract. The policy owner pays the insurance company a premium. The insurance company holds and pools the premiums of all of its policies, and in the event of the death of an insured person, it pays out the death benefit to the beneficiaries.
There are two main types of life insurance policies. To choose an insurance policy that meets your needs and those of your family, it is necessary to understand the provisions of each.
Permanent Life Insurance
All life insurance is based on the probability that the insured will die soon or live a long, full life. That’s why insurance for younger people is less expensive than for senior citizens.
Permanent life insurance, also called cash value, is structured with the intent to last for the entire life of the insured person, regardless of when they die. There are three main types of permanent life insurance:

• Whole Life includes a savings component, somewhat like a certificate of deposit that is backed by the insurance company.
• Variable Life includes an investment feature similar to mutual funds.
• Universal Life also offers an investment feature but with more flexibility. It is less expensive than the others types of permanent life but also has a higher risk in its investment component.

Depending on a family’s financial situation, permanent life insurance may also provide some tax advantages and serve as an instrument for asset growth in estate planning.
Term Life Insurance
Term life is the least complicated form of life insurance. In return for the premiums, the insurance company pays the death benefit if the death of the insured occurs during the term specified in the policy, usually 10, 20, or 30 years.
Term life is also the least expensive form of life insurance. The premium amount is based on the term and age of the insured, with shorter terms offering lower premiums for the same death benefit.
If the insured does not die within the term period, the insurance company keeps the premiums and there is no death benefit. This may seem unfair, but the distinct advantage of term life insurance is that it provides a much larger death benefit per dollar spent in premiums.
Young families, or those with high numbers of dependents who would be hit hardest by the loss of income from a parent or spouse, often choose term life as a way to maximize their insurance dollars. Most term policies can be converted to whole life insurance later in life when there are fewer dependents and when families are more financially stable.
Choose Wisely
There has been much discussion over the years regarding the right type of life insurance. As with anything else, the right choice depends on your personal circumstances.
Take the time to evaluate your family’s current and future income needs, debt obligations, and available financial assets. Choose your life insurance wisely. Your family’s future and your peace of mind depend on it.