3535 Executive Terminal Drive Henderson Nevada 89052
702.763.3590
We live in a society where people gain an education, become married, purchase a home, have children, enjoy life, and retire. Throughout life we must understand that goals, visions, desires can be sidelined by death, sickness, tragedies and more. We as humans will focus on the bright side of life, often fail to recognize the dark side of life. A certain mindset we must understand is life preparation. For example, preparing for an untimely death, loss of employment, financial distress and/or injuries. While a perfect world is desirable, it isn’t reality. Several resources exist while preparing for life’s unforeseen events. Life insurance is by far the simplest method for life preparation. However, what is life insurance?
What is life insurance?
Life insurance is a financial resource that will provide income assistance should an untimely death or sickness occur. For an untimely death: a married couple typically operate a two-income household with children and other assets. When a spouse passes on during the peak part of life, income distress will occur. What is income distress: operating a household with one income, young children still require higher education, enabling the surviving spouse to acquire further savings. Which form of life insurance is the correct choice?
Life insurance education is imperative. Understanding the types of life insurance being term life insurance or permanent life insurance, is an important concept before purchasing a policy. Often insurance agents persuade customers to purchase a policy that the agent feel is suitable. Or agents degrade a certain life insurance policy based on biased thinking. Let me be clear, I’m totally against advocating a certain life insurance policy. Life insurance isn’t a one size fit all product. Life insurance is designed to meet certain financial goals per household. Term and permanent life insurance both play a role, per family. What are term and permanent life insurance? Each have a purpose.
What is term life insurance?
Term is a form of life insurance with time designations. Term life increments range from 5, 10, 15, 20, and 30 years. Concluding the actual term limit, one can renew the policy or purchase an actual permanent life insurance policy. This form of insurance is very affordable. Face amount can range from $25,000 to $1,000,000. Term doesn’t accumulate cash savings like permanent life insurance.
Term life insurance is designed for families with high financial liabilities: such as mortgage, car note, high assets, young children, high income employment or businesses. The purpose of life insurance is financial protection over time. Younger families have higher financial liabilities vs an older family with less debt and lower financial liabilities. Term life insurance is ideal for these situations. Begin with a high face amount, while lowering the policy over time, by conducting annual evaluations.
What is permanent life insurance?
Death or failing to pay the monthly premium, is the only way permanent life insurance will expire. Permanent life insurance known as whole life or universal life (I’ll explain the difference in another article) both have advantages.
Cash Accumulation
Second Option for retirement Cash
Interest accrued Cash
Universal Life – Tax Shelter
Permanent life insurance is adjustable like term life insurance, however adjusting the face value can have a positive or negative affect on the cash accumulation. It is important to remember, permanent life insurance can be more expensive than term, when dealing with high face amounts. I.E. $200k, $300K etc.
In conclusion, both forms of life insurance are wonderful options for families. One will argue buy term insurance and invest your cash for retirement savings. Others will argue by a permanent life insurance policy and let the policy build an additional stream of income for retirement. We’ve help clients with both scenarios. Clients purchased a term life policy and purchased a small permanent policy, while increasing the permanent policy as the term policy decreased over time. Thus, as one age, the worry of gaining a permanent policy is eliminated. Also, we’ve had clients purchase only a permanent policy. Regardless, every family will have different financial requirements, which will require different life insurance solutions.
Life insurance can save a family from financial ruins rather during a death or an illness that may result in a death. Understanding the key facts will enable one to purchase the correct policy. Call us at 702.763.3590
Understanding Life Insurance Term Insurance or Permanent Life Insurance Las Vegas Nevada
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