Navigating Life's "What Ifs"






What is Life Insurance?

When a person dies, there are many different expenses that will need to be paid.  These expenses may include such items as funeral expenses, current bills, and possibly estate taxes.  In addition, there are usually other financial needs the insured would have met if they had remained alive, such as mortgage payments, other debt obligations, living expenses for the survivor(s), and college costs for children.  Life insurance is a contract between an insured and an insurance company to provide a death benefit to beneficiaries to provide for these financial needs.    

How much life insurance do I need?

There are many and varied needs for funds upon the death of an individual, and life insurance is not a "one size fits all" coverage.  A very basic rule of thumb used over the years is based on a mutliple of an individuals salary, ranging anywhere from four to ten times an annual salary.  An individual personal needs analysis can often arrive at a more accurate amount to properly cover a family's needs. 

Who receives money if I die?

A better term for life insurance should probably be "love insurance," since the policy provides benefits for the loved ones left behind.  Upon death of the insured, an insurance company will pay the policy benefit to the beneficiary or beneficiaries named by the insured on the policy.  Some policies may provide additional benefits.

Who can I name as my beneficiary?

Your choice of beneficiaries is entirely yours, and can be changed at any time.  You can name a spouse, individual(s), organization(s), or your estate.

What kind of life insurance should I buy?

Although there are many different types of life insurance, nearly all policies are variations of term or permanent life insurance.

    Term - This type of insurance is written for a specific period of time (1, 5, 10, 15, 20, 30 years), and it is
        exclusively death coverage.  If the insured dies during the "term," the death benefit is paid to the
        beneficiaries.  If at the end of the term the insured is still alive, the coverage ends, unless "renewable"
        by the insurance company.  This is often the least expensive life insurance to purchase, with rates
        determined by a number of factors including duration, age, and health of the individual.

    Permanent / Whole Life - Unlike term life insurance, a permanent policy never terminates as long as the
        premiums continue to be paid by the individual.  It also builds cash values that can provide other
        living benefits in addition to the death benefit.

A third type of life insurance, universal life or variable universal life, is a combination a term, permanent, and various investment options, offering additional valuable benefits.

Let Encompass IFS help you make sense of the different types of life insurance with all the options available, and help you find the coverage that makes sense for you!

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