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Have You Ever Thought About What Life Insurance Can Do?
Have you ever thought about what life insurance can do for you? The main purpose of this type of insurance is to ensure that those you care about will be OK if something should happen to you. It helps you to make sure that your loved ones can have enough money to fulfill their obligations and pursue their dreams.
Most people need life insurance in one form or another. If one or more of the below apply to you then you are in the market for life insurance:
• You have a significant other or an older family member who depends on your wages
• You are a working couple that is carrying debt
• You or a spouse has dependent children
• You own a home
• You are planning to start a family
Purchasing an insurance policy for you and your family can be one of the most valuable decisions you could ever make.
Term Insurance
Term insurance guarantees coverage for a certain period of time as long as premiums are paid.
Most term insurance policies are renewable once the time has expired, although it is likely that premiums will increase. Term insurance provides a death benefit and does build cash, so you can generally purchase more insurance for less. Term insurance is frequently the most affordable type of life insurance.
Whole-Life Insurance
Are you the type of person who wants the life insurance protection with more guarantees? If so then a whole life insurance policy may be for you. It has premiums that will not increase or decrease, a guaranteed death benefit and guaranteed cash value. With whole life insurance you do not have to pay current income taxes on the cash value within the policy and you may be able to access the cash on a tax favored basis.
Whole life insurance policies are also known as permanent life insurance because it remains in force as long as premiums are paid as scheduled. As time goes on, these types of policies build up cash and can allow you to borrow cash from the policy to use however you wish. When you pass away your beneficiary will receive the death benefit, minus the cash value borrowed from the policy.
Universal Life Insurance
Universal insurance is a flexible type of life insurance, allowing you to adjust the amount of coverage that you have and the amount of premiums you pay. You also have the potential to build cash in your policy and access the cash on a tax favorable basis.
The flexibility with your policy can allow you to build enough cash, so that the policy can pay for itself. If you desire, you can then pay additional premiums to build the cash back up in the policy. An increase in your death benefit coverage is possible with additional underwriting.
The two types of universal options that are the most popular are fixed and indexed life policies. One of the main differences between them is how the interest on the policy is credited. With the traditional fixed life policy the insurance company will credit a specified interest rate to the policies cash value. Index universal life credits the interest based on the changes in the major index such as the S&P 500. Both types of policies offer varying degrees of guarantees and returns, based on your appetite for risk.
Buy-Sell Agreements
Buy-Sell agreements establish an exit strategy following a per-determined triggering event such as retirement or disability. It will help to determine when a sale takes place, to whom, and how the purchase price will be determined, funded and paid. A potential way to fund a buy-sell agreement is buy purchasing a life insurance policy. At disability or retirement of an owner, the life insurance policies cash value can be used to help buy out the departing owner's share of the business. Should a death of an owner occur, then the insurance proceeds are paid to the company or surviving owners and are used to purchase the deceased owner's share of the business. The proceeds of the insurance policy can provide an income tax-free death benefit (a source of cash without tapping into company assets) and can be used to pay disability or retirement benefits. It also helps to keep lines of credit open, following the loss of an owner and can allow for uninterrupted business. For those of you that own a business or know someone that owns a business, this is a very important part of your planning. So please consult a qualified professional to discuss.