Of the two major categories of life insurance – term and cash value - term life is the easiest to understand and most cost-effective risk management tool to employ. Term life insurance essentially allows you to rent the death risk protection you desire for a certain number of years. The timeline is usually your working years and the coverage affords important protection for your family or business from the financial hardship caused by the death of the breadwinner or key-person.
Term life insurance is the the best option to protect against the risk to achieving specific goals – funding college for your children, funding a survivor benefit for a spouse, retiring mortgage debt, or funding a buy-sell agreement between business partners – that has a foreseeable timeline. For situations where the risk timeline is less clear, adding a conversion feature to the term life policy that would allow the policy holder to convert the policy to a cash value policy without evidence of insurability can be a good planning strategy.
Since the life insurance carrier will be relieved of paying a death benefit at policy termination, term life insurance is the most inexpensive way to purchase a substantial amount of death benefit. In fact, term life insurance is an excellent value when you consider the significant of income-tax free death benefit you can purchase for the premium dollar.
As life insurance experts, Living Wealthy Advisors can design your optimal life insurance plan, determining the appropriate death benefit and coverage, and guiding you to purchase the right type of policy for your family or business.
