As people are living longer and longer with the advancement of medical technology, your plan for retirement may have to cover more years than in the past. If you are retiring before the age of 65, you may have to plan for a full 25 to 35 years of potential income. But, what if something happens well before then?
Anything is possible, especially as you age. Medical issues can become more complex and there are no guarantees as you get older that you will be able to maintain your health. Making wise investments can not only help you to live comfortably during your retirement, but can also protect you and your family should it be needed.
Life insurance coverage is an investment option that can work as a backup for many people. However, with complicated policies and insurance lingo that is hard to understand, it can be a challenge to make the right investment. Doing your research, talking to the experts and getting sample rates from trusted providers is the first step to making a wise decision.
There are many different types and styles of life insurance coverage that can fit your needs. Join us as we explore the basic components of life insurance to help you make your investment decisions with confidence.
If you are looking to cover a specific period in your life while still saving some money, then Term Insurance might be right for you. For example, if you have smaller children and your priority is to ensure that their college educations are covered should something happen to you, then a term policy covering 20 to 25 years may be just what you need. Term insurance can be renewed at the end of the term, but you will have to undergo another application as your age, and your medical history may be different when you are older.
The monthly premiums are generally much lower with a term policy, as are the payouts. If your concern is your children, paying off the remainder of your mortgage, covering funeral expenses or just paying off debts after you’re gone, a term policy should be enough to cover it. This is a straight payout policy with no investment or equity aspects.
Universal Life Insurance
Whole Life Policy
This style of life insurance will cover you from the time that the policy is started until your death, regardless of your age. It gives you the opportunity to amass equity savings that can be borrowed against, if you so choose. As long as your minimum annual premiums are paid, you have the option of using your plan to help you save. You can also use the equity that you have to pay the existing premiums, so the policy ends up paying for itself. Whatever equity you borrow or use during the term will be deducted from the final payout.
Variable Life Policy
This style of coverage is perfect for anyone interested in expanding their portfolio. You can use the equity on your policy for investments managed by your insurance broker. There is some risk attached to this style of policy, but most companies offer a guaranteed minimum payout benefit as insurance against investments that don’t make money. For successful investments, you can use your profits to pay out your premiums for the year or as a cash loan.