Permanent Life Insurance
Permanent Life insurance is perhaps the most complete financial product in existence. Much has been said about this 200 year old product that has been negative, however when one carefully examines permanent life insurance it is easy to see how complete a product it is therefore making it a very necessary piece of anyone’s portfolio. Permanent Life insurance is the only financial product that accomplishes all of the following:
- A savings account compounding tax deferred and withdrawn tax free.
- An income tax free death benefit worth much more than the value of the savings account. (Life insurance protection).
- All of the money contained in the policy is protected from creditors. (Lawsuit protection).
- If the disability waiver of premium is purchased, the entire contribution will be made to your account if you are totally disabled. (Disability protection).
Challenge yourself and see if there is any other financial product in existence that does all of the above. We encourage you to use your Permanent Life insurance policy as a source of funds thus becoming your own “banker” and redirecting all of the interest and fees you currently pay to banks, finance companies, credit card companies and leasing companies back to you. This money then builds on your behalf in a tax free environment and later in life provides you with a tax free stream of income.
Term Life Insurance
Term Life insurance is the original type of life insurance developed 200 years ago. It is simply an insurance policy that pays if you die. Over the years Term Life insurance has evolved into the products we have today.
Term is a very affordable way to purchase death benefit coverage in the early years. If your intention is to have coverage for your entire life term may be the most costly solution over your lifetime. Many people purchase a combination of term and permanent insurance to satisfy their current and future needs. Facts about Term Life insurance:
- It provides an income tax free death benefit.
- The premiums increase as one gets older.
- The premiums can be guaranteed for a period of years (depending on age) 1,5,10,15,20,25,30
- Provides a temporary solution. Is not a permanent solution
- Excellent if you need insurance for a fixed period of years
- Business situation
- Child in college
Disability insurance insures your income. If we lost all of our property and still were able to work and earn a living, in time we could replace all that we lost. If we lost our ability to earn then we would also lose our income. How long could you live without a paycheck? Some say 6 months, some 1 year, most say they couldn’t survive 1 week.
Disability insurance is simple; if you are sick or hurt and cannot work you will receive a check until you can work again. It is available both individually and through your employer. The amount of disability insurance you can obtain is in proportion to your income. A good yardstick is you can insurance approximately 60% of your pre-tax income.
Before you collect there is generally a waiting period (commonly referred to as an elimination period). This is the period of time that you must wait after you become disabled before you can collect. The benefit period tells you how long you will collect. Age 65 is a very common benefit period, although there are shorter ones (5years) and occasionally policies have a lifetime benefit period.
The definition of disability can be different from company to company and policy to policy so it is important to understand the definition when purchasing disability insurance. Disability insurance is extremely important since it protects your means of survival – your ability to earn.