Even with all the planning you do across multiple aspects of your life, unexpected events will occur, and you need to be as prepared for them as possible. When it comes to your family and their well-being, one of the most important preparations to help mitigate the risks is investing in insurance. While age is certainly one of the most important factors to consider, the biggest issue (and one of the hardest to predict) is longevity.
There are many different types of insurance available to our clients, and we will gladly work with you to determine which one(s) is best for your situation. However, here is some information about the most common types of insurance we offer.
Whole Life Insurance
In exchange for fixed premiums, an insurance company promises to pay a set benefit when the policyholder dies, but also offers additional benefits as well. Whole life insurance policies can build up cash value—effectively a cash reserve that pays a modest rate of return, and the growth is tax-deferred. Guarantees are based on the claims-paying ability of the issuing company.
Term Life Insurance
Term insurance provides temporary life insurance protection on a limited budget. When a policyholder buys term insurance, they buy coverage for a specific period of time and pay a specific price for that coverage.
If the policyholder dies during that time, their beneficiaries receive the benefit from the policy. If they outlive the term of the policy, it is no longer in effect. The person would have to reapply to receive any further benefit.
Life Insurance Retirement Plan
A life insurance retirement plan (LIRP) is a permanent life insurance policy that uses the cash value component to help fund retirement. Current tax laws allow policyholders to overfund a policy, paying more than the premium. This strategy can result in tax advantages, including the ability to pull the cash value out tax-free.
Long-Term Care Insurance
Traditional long-term care insurance provides you a stated daily or monthly benefit should you have severe cognitive impairment or be unable to perform at least two of six daily living activities. Long-term care policies are usually reimbursement based, meaning they will reimburse you for actual costs paid. According to Genworth Financial’s 2020 Cost of Care Survey, skilled nursing in Mississippi costs $7,057 per month.
An annuity is a contract between you and an insurance company in which the company promises to make periodic payments to you, starting immediately or at some future time. You buy an annuity either with a single payment or a series of payments called premiums.
Some annuity contracts provide a way to save for retirement. Others can turn your savings into a stream of retirement income. Still others do both.
Disability Income Insurance
Disability insurance provides a way to ensure you will have an income for yourself and your family if you become ill or injured and are unable to work. The benefits are provided to you (the insured) tax-free when paid for with after-tax dollars.
If you are a business owner, disability insurance can also be structured to provide the necessary business income to continue operations and payroll should you become disabled and unable to work. It does not, however, provide you a salary. You would need your own personal disability policy to complement the one structured for the business expenses.
Every individual’s situation is different, so it’s important that you meet with your financial advisor to determine which type(s) of insurance is best for you and your family. Call us today for an insurance review and assessment.