Life Insurance – Do You Need More Than One Type of Policy?

Life insurance remains a flexible and versatile financial asset. Unfortunately, with many different options, finding the most suitable policy seems complex. It is hard to find a financial vehicle with as many tax advantages, appropriate in as wide a variety of situations, and with such a wide range of premiums. So, you may end up like many policy owners, dissatisfied with your coverage. Before your discussions with your wealth advisor in Denver, this outline of different types of policies helps provide information you need to secure suitable life insurance solutions.

The three basic types of life insurance fit different life situations. Occasionally, you may face a unique case when unusually sophisticated planning or a novel policy application is needed. Generally, each type of life insurance correlates explicitly with specific needs.

Term Insurance

Term insurance provides a high death benefit for a comparatively low cost, specifically over a finite time period. The two situations where term insurance applies are:

• Income Replacement
• Debt Security

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Income replacement is when you buy life insurance to protect your family should something terrible happen to you (or another insured family member.) Then the income previously earned by the decedent continues from the death benefit paid by the life insurance company.

Debt security is when a family wants life insurance to cover a specific mortgage or loan. Business partners purchase life insurance to cover the face value of a loan they take for the company.

Generally, term insurance is ideal when the defined need lasts for a known time period.

Universal Life Insurance

Universal life insurance policies provide permanent death benefits with several different premium schedules.

While very versatile, universal life solutions shine when you focus only on a permanent death benefit at the lowest possible premium.  Like other permanent life insurance, cash accumulation features offer different funding options with the premium payment flexibility.

Generally, universal life insurance is ideal for providing the highest, permanent death benefits for the lowest cost.

Whole Life Insurance

Whole life insurance policies provide a permanent death benefit and build cash value within the policy. You can access the cash value during your lifetime.

Whole life permanent death benefit coverage is similar to universal life. The major difference is the emphasis on the cash value, so you usually pay higher premiums.

So, the life insurance portion may not be the primary goal of whole life coverage. Instead, investors use these policies as an accumulation asset. You fund a whole life policy and earn a return on your premiums, just like other investments. And later, you dip into the cash value pool of money. But because it is still life insurance, Congress offers favorable tax treatments. When you combine the tax benefits with the rate of return on your premiums, whole life represents a compelling investment option. Ask your wealth advisor in Denver for more information.

Summary

Hopefully, the information here equips you to more easily perceive the type of life insurance coverage that matches your financial needs. Frequently, families, businesses and investors find more than one type takes into account individual characteristics. Considerations such as other assets, budget, risk tolerance levels, demographics and family situation affect the type of insurance that is right for you. Carefully consider each aspect with your wealth advisor in Denver. That way, your coverage works for you and your family during your lifetime and after your death.

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The information provided is for informational and/or educational purposes only and is not, in any way, to be considered investment advice nor a recommendation of any investment product. Advice may only be provided by GreenStar Advisors’ investment advisor representatives after entering into an advisory agreement and providing us with all requested background and account information.

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. 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.