What Should I Consider When I Select a Plan?
There are many reasons why people purchase life insurance.
This includes funeral or cremation costs, medical bills not covered by health insurance, estate administration fees or other unpaid obligations. Even expenses such as a mortgage.
Debt or Income Replacement
Life insurance benefits can help replace your income if you pass away. Your beneficiaries can use the money to help cover essential expenses, such as paying off a mortgage as discussed, a vehicle loan or lease, home equity loan, credit cards or securing college educations for children.
Inheritance for Your Loved Ones
The death benefit can also serve as a supplement to other inheritance funds you may wish to leave your heirs.
Federal or State Estate Taxes
Your heirs may face an estate tax upon receiving their inheritance, depending upon the state of residence and the amount. Life insurance benefits can be used to partially or completely offset this cost for your heirs.
A lot of people have favorite charities and would like to name that charity the beneficiary. This can help ensure your philanthropic goals are met after you die, and that benefits are provided to your charity of choice
Cover Children’s Expenses
Most parents want to be sure their kids are well taken care of and can afford a quality college education. For this reason, additional coverage is absolutely essential while children are still at home.
Business Partner’s Shares
If you are a business owner and have a partner and one passes away will the surviving partner have enough cash to buy the other interest from his or her heirs and pay their share of the company’s obligations without having to sell the company itself.
Tax Free Retirement Planning
People purchase certain universal life plans to build cash value to be used later for tax free income purposes.
Popular Life Insurance Plans to Supplement these Concerns
Term Life Plans
These are structured with period terms for example 10 year, 20 year or 30 year terms. If you are still alive after the term you choose expires, you can choose to walk away from the plan and not pay any further premiums. In most cases insurance companies provide you with the option to renew the policy after the term expires but at a much significant higher cost.
Term plans are very inexpensive and it is the most affordable life insurance purchased but it’s not for everybody. For example, term life is a good plan when wanting to cover a debt such as a mortgage or home equity loan. A lot of young couples starting out like to purchase term insurance for this reason. Some people just purchase term life because it is the least expensive and don’t mind the term limits placed on the contract.
Term life plans do not build cash value.
Universal Life Insurance
Most universal life plans are designed for all the reasons we just discussed with regarding to final expense and term plans but build significantly more cash value over the life of the plan. There is a guaranteed death benefit option you can choose to pay the minimum premium to make the plan affordable and guarantee the death benefit to pay out to the designated beneficiary. Another popular option is to overfund the premium and build significant cash value to borrow at a later during your retirement years, which is known as tax free retirement planning.
Final Expense Plans
These are very popular plans geared towards the senior market. They are designed to cover your final expenses such as funeral costs, cremation, headstone etc. These plans usually have easier underwriting guidelines and are affordable for retirees. Most final expense plans also build cash value although not as much as a universal life plan.
These are just a few options regarding your life insurance planning. Speak with a BGA agent to assist you in choosing the right plan for you. Whether it is tax free retirement planning, a business partnership agreement, leaving an inheritance for loves ones, covering a debt, there is an option for you.
Need help selecting your plan?
There are a number of specific reasons why you might need a certain plan, such as plans with a LTC rider or no medical exam and no waiting period.
BGA Insurance Group works with clients in the following states:
- New Jersey
- New York