Life Insurance

There are many types of life insurance to fit individual needs and circumstance. The following are some of the basic types of life insurance available.

Term Insurance – The simplest form of insurance. You purchase coverage for a specific price for a specified period. If you die during that time, your beneficiary receives the value of the policy. There is no component.

Whole Life – Similar to term, but you purchase the policy to cover your “whole life” not just a set period. Premiums remain level throughout the life of the policy, and the company invests at least a portion of your premiums. Some firms share investment proceeds with policyholders in the form of a dividend. Many companies will offer “a relatively low guaranteed rate of return,” but in reality pay at a rate in excess of the guarantee.

Universal / Index Life – You decide how much you want to put in over and above a minimum premium. The company chooses the investment vehicle, which is generally restricted to bonds and mortgages. The investment and the returns go into a cash-value account, which you can use against premiums or allow to build.

  • With some policies, sometimes called Type I or Type A, the cash account goes toward the face value of the policy on the death of the policyholder.
  • With a second variety, sometimes called Type II or Type B, the beneficiary receives the face value of the policy plus all or most of the cash account.
  • While Type II is meant to provide a partial hedge against inflation, it demands higher premiums as you get older than Type I.

A variation of a universal policy allows policyholders to choose vehicles.


Disability Insurance

When a physical injury keeps you from working, disability insurance can help get the bills paid.

In reality, disability insurance is as important as (and in some cases, even more important than) life insurance.

More become disabled than die that’s because at any given age the odds of becoming disabled are much higher than dying. In fact, every year 12% of the adult U.S. population suffers a long-term disability. One out of every seven workers will suffer a five-year or longer period of disability before age 65, and if you’re 35 now, your chances of experiencing a three-month or longer disability before you reach age 65 are 50%. If you’re 45, the figure is 44%.

These odds would not be a problem if people had substantial savings that could be drawn on in the event of a disability. But that’s rarely the case, and any money that has been set aside has likely been earmarked for goals such as college or retirement.

There are many kinds of disability policies and options, however, the basics are simple. The first variable is the amount of monthly benefit. Most disability policies have a fixed monthly benefit that does not increase with time, although you can purchase extra coverage, or riders, that offer higher payment schedules

The second variable is the definition of disability — whether it is “own occ,” or the inability to perform the duties of your specific occupation, or “any occ,” the inability to perform the duties of any job for which your education and training make you qualified.

The third variable is the waiting period, or the amount of time you must be disabled before benefits kick in. These waiting periods can range from one week to two years, and the longer you wait the less your disability policy will cost.

The fourth variable is the benefit period, or how long you will receive monthly benefits once your policy starts paying. The benefit period can range from six months to life, depending on what you choose as well as what your insurance company is willing to offer you.

In addition to these variables, there are other coverage options, as well as a variety of other riders. The most important is a rider that pays if you can only remain or return to work part-time. The Social Security offset rider guarantees that if you qualify for disability payments under your insurance policy but not for Social Security (a frequent occurrence) your disability policy will pay what Social Security should have.

Another important option is the additional purchase option, which guarantees you the right to buy additional disability insurance in the future regardless of your health at that time.

If you have any questions about Disability Insurance or not sure if you need coverage please contact us for a needs assessment.