Though difficult to deal with, death is an inevitable factor that everyone needs to be prepared for at any time. If something like that happened to you (or to your husband or wife), what would happen to your family or to your business? Would they have enough money to pay for:
- Your funeral costs
- Debts you owe like credit card bills, car payments, or the mortgage on your home
- Child care
- Your children's education
- Retirement
- Funding buy/sell agreement
The most important reason to buy life insurance is to protect your family by making sure they have enough money when something happens to you. Your life insurance contracts can be used for tax-exempt investments and can be used to plan for enhanced charitable giving.
What Types of Life Insurance are Available?
1. Term Insurance: Low cost insurance plan for a short term need can be very effective for mortgage insurance or a bank loan, to fund buy/sell partnership agreements or other near-term needs The disadvantage is that if used for long-term needs, the costs can be extremely expensive and thus not designed for “life time”. Alternatively, term-life contracts can be useful for a lifetime need as it does not have cash value and the premium is level and guaranteed for life.
2. Universal Life & Whole Life: The life insurance industry has developed attractive and highly sophisticated products that can help you meet two planning objectives at once: having insurance coverage and providing income from tax-sheltered growth These policies allow you to pay insurance premiums and make deposits to a tax-sheltered investment account at the same time. Universal life plan is newer, more flexible and may offer more planning opportunities as compared to whole life plans.