Life Insurance

Life Insurance

Life insurance is one of, if not the most cost effective ways to protect your family’s financial future. Arrow Insurance Professionals can help you find the best life insurance policy possible for your unique situation.

Term Life Insurance vs. Whole Life Insurance

The most common types of life insurance are Term Life and Whole Life. Term Life, which covers your beneficiaries for a certain period of time, or “term” is generally the least expensive, but with some drawbacks.

With Term insurance, you are essentially “renting” coverage from the insurance company for that period of time. If you should die during that term, your beneficiaries will receive the full face amount of your policy, tax-free.

TERM: Term insurance is the simplest form of life insurance available. It provides financial protection for a specific period of time, usually 10, 20 or 30 years. These policies are very inexpensive and we recommend you always choose the longest ‘term’ to lock in the rate for. These policies only provide a death benefit, there are no cash values that accumulate and no policy loans are available in them.

With Whole Life insurance, you are the “owner” of the insurance contract and have a bit more flexibility as to what you can use the policy for. For example, with Whole Life, you can take loans against the cash value, and even sell a whole life policy.

PERMANENT: Permanent life insurance such as universal life, whole life and variable universal life provide long-term financial protection. These policies include the death benefit in addition to cash savings and policy loan availability. Because of the savings element of these policies, they will be more costly than term insurance.

Because life insurance rates are dependent upon your health history and current health status, the best time to purchase life insurance is at a young age, and/or when you have people or children who depend on you financially to maintain their quality of living.

Don’t wait until it’s too late. Our agency can help you with all of your life insurance needs.

For help in determining what type of life insurance is best for your situation, or for assistance in determining how much life insurance is enough for you, simply give our agency a call. We would be honored to be your insurance agency for life.

LIFE INSURANCE

Because our agency is 100% independent, we have access to a wide range of  life insurance companies for you. Many financial experts consider life insurance to be the cornerstone of sound financial planning.

WHY IT’S IMPORTANT TO YOU

IT’S AN EXTREMELY IMPORTANT TOOL IN THE FOLLOWING SITUATIONS:

  1. Replace income for dependents
    If people depend on your income, life insurance can replace that income for them if you die. The most commonly recognized case of this is parents with young children. However, it can also apply to couples in which the survivor would be financially stricken by the income lost through the death of a partner, and to dependent adults, such as parents, siblings or adult children who continue to rely on you financially.
    Insurance to replace your income can be especially useful if the government- or employer-sponsored benefits of your surviving spouse or domestic partner will be reduced after your death.
  2. Pay final expenses
    Life insurance can pay your funeral and burial costs, probate and other estate administration costs, debts and medical expenses not covered by health insurance.
  3. Create an inheritance for your heirs
    Even if you have no other assets to pass to your heirs, you can create an inheritance by buying a life insurance policy and naming them as beneficiaries.
  4. Pay federal “death” taxes and state “death” taxes
    On Jan. 1, 2011, the estate tax returned. According to a new law enacted in December 2010, estates valued at $5 million or less are exempt from the tax. Estates worth more than $5 million are taxed at a 35 percent rate. Although there was no estate tax due in 2010, some heirs encountered larger-than-expected capital gains taxes upon sale of inherited assets. This was due to the requirement that the basis of such assets be carried over from the decedent to the heir.

With the return of the estate tax in 2011, the stepped-up basis on inherited property also returned. This means that an asset’s basis is its fair market value on the day of the original owner’s death.

  1. Make significant charitable contributions
    By making a charity the beneficiary of your life insurance, you can make a much larger contribution than if you donated the cash equivalent of the policy’s premiums.

Create a source of savings
Some types of life insurance create a cash value that, if not paid out as a death benefit, can be borrowed or withdrawn on the owner’s request. Since most people make paying their life insurance policy premiums a high priority, buying a cash-value type policy can create a kind of “forced” savings plan. Furthermore, the interest credited is tax deferred (and tax exempt if the money is paid as a death claim).



Glossary terms

Term insurance: Life insurance that provides coverage for a specific period. If the policyholder dies during that time, his or her beneficiaries receive the benefit from the policy. If the policyholder outlives the term of the policy, it is no longer in effect. Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

Whole Life insurance: Permanent life insurance with fixed premiums and death benefit. Whole life insurance policies accumulate cash value which grows tax deferred. Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and  other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.