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What does life insurance cover?
Bills start accumulating quickly in the event of death.  Life insurance covers immediate expenses such as funeral services, unsettled hospital and medical bills, mortgage payments, business commitments and meeting college expenses for children.  Life insurance can also give access to cash to pay for grocery bills and other daily expenses, in addition to securing your estate by providing tax-free cash to pay estate and other obligations.

Maintain your lifestyle.  You and your family's standard of living can be maintained with the right coverage.  Life insurance can add much needed normalcy during a difficult time.
Types of life insurance.  There are two basic types of life insurance: term life and whole life.  Term life policies offer death benefits, which means if you die your policy will pay policy limits and if you live past the length of the policy you get no benefits.  Whole life, or permanent insurance, is more expensive but has longer terms some up to age 100 and accumulates a cash value that the policyholder can earn dividends and borrow against-- or cash-in upon surrendering the policy.

Protect your children.  Customize your policy and coverage.  If you have children, a spouse and parents to care for, you'd want a policy that would protect them after your death.  It's extremely important that you ensure that your children have what they need to survive in case of death. 

How much do you need?  A rule of thumb is that your life insurance policy limit would equal those items you want the policy to pay.   For example,  if you want your life insurance to pay off college education for your dependents, pay off mortgage or bills, fund charities, maintaining a certain lifestyle, etc,  then the sum of what you want your life insurance to pay is the amount of coverage to sign up for.    Nowadays, advisors look at the number of dependents you have, how long they will be dependent on you, and the lifestyle that they expect to live after your death.  It's not a simple equation equation, but generally you will need more coverage than a typical plan offered by an employer.

Employer life policies.  Employer-sponsored life insurance is rarely sufficient -- and you can't take it with you if you lose or leave your job.  Buy an individual policy rather than a group life plan.  If you're healthy, group policies are rarely cheaper.  Group policies decreases every year after you turn 65.  Many people don't know it until they receive their retirement packages from their company.

Tax free benefit.  You pay no current income tax on interest or other earnings credited to cash value.  As the cash value accumulates, it is not subject to current taxation.  You pay NO income tax if you borrow cash value from the policy through loans.  Your heirs pay NO income tax on proceeds.  Your beneficiaries receive death benefits completely free of income taxation.  Therefore, a $500,000 policy delivers $500,000 in benefits with no deductions and no withholding required.  Note: this is true with all life insurance policies, both term and cash value.  You can avoid potential estate taxes  and probate costs on policy proceeds as long as the beneficiary designations and policy ownership are arranged in accordance with current law.  Permanent life insurance is a unique financial product in that it provides death benefit protection along with the potential for attractive tax advantages.

Get advice.  Life insurance is not simple.  Contact me for free consultations or visit
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