Policy Considerations

Selecting the appropriate life insurance policy involves careful evaluation of the insured’s needs, goals, and budget. Key components include:

Key Questions to Consider

• Short-Term or Long-Term Protection?

  • Short-term goals (e.g., education expenses) indicate a need for temporary (term) insurance.

  • Long-term goals (e.g., providing for a spouse) may require permanent (whole life) insurance.

• Coverage Amount: The death benefit determines financial protection.

• Budget for Premiums:

  • Term insurance offers high coverage at lower premiums, suitable for limited budgets.

  • Permanent insurance has higher premiums but provides lifelong coverage and cash value accumulation.

• Access to Cash: A permanent policy with cash value is preferable if access to funds is anticipated.

• Additional Benefits: Riders can enhance coverage with tailored benefits.

Types of Life Insurance

• Temporary (Term) Insurance:

  • Coverage for a specific period, lower premiums, no cash value, suitable for short-term goals.

• Permanent (Whole Life) Insurance:

  • Lifetime coverage that builds cash value, higher premiums, includes living benefits through cash value access.

Cash Value in Permanent Insurance

• Grows tax-deferred and can be accessed via policy loans or surrender. Upon maturity, the face amount is paid out.

Riders: Customizing Coverage

• Additional benefits to enhance existing coverage at a marginal cost (e.g., waiver of premium, accidental death riders).

Aligning the policy type and features with the insured's goals and financial situation helps effectively meet both short-term and long-term needs.