We previously posted an overview of whole life insurance (which is designed to remain in force for your whole life, as long as you remain current with your premiums). In comparison, “term insurance” is the simplest form of life insurance. It provides temporary life insurance protection on a limited budget. Here’s how it works:
Term Life Insurance
When a policyholder buys term insurance, they buy coverage for a specific period of time and pay a specific price for that coverage.
If the policyholder dies during that time, their beneficiaries receive the benefit from the policy. If they outlive the term of the policy, it is no longer in effect. The person would have to reapply to receive any further benefit.
Unlike permanent insurance, term insurance only pays. It does not accumulate a cash value. That’s one of the reasons term insurance tends to be less expensive than permanent insurance.
Many find term life insurance useful for covering specific financial responsibilities if they were to die unexpectedly. Term life insurance is often used to provide funds to cover:
- Dependent care
- College education for dependents
- Mortgages
Is Whole Life Insurance Right for You?
Would term life insurance be the best coverage for you and your family? That depends on your unique goals, needs, and circumstances. You may want to carefully examine the pros and cons of each type of life insurance before deciding what type of policy may be the best fit for you.
Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.
Life insurance is not insured by the FDIC (Federal Deposit Insurance Corporation). It is not insured by any federal government agency or bank or savings association.
Avizo Wealth Management
Just like everything else we do, Avizo Group’s Wealth Management services are client-centered. Whether you are investing to build wealth, protect your family, or preserve your assets, our personalized service focuses your needs, wants, and long-term goals. Contact ustoday to learn more about how he can help you.
Earl Blackmon, CPA
Avizo Group offers Wealth Management for clients who would like assistance in investing, saving, and portfolio diversification. This is an area of need for many of our clients who want to invest but need someone they know and trust to help them. Earl Blackmon holds a Series 7 and Series 66 license.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2021 FMG Suite.
