I love mysteries, and yes, that includes murder mysteries. Many times on tv, to solve the whodunit, you only have to follow the money - insurance money. Who benefits from a big life insurance? Probably not the butler!
Do you have life insurance? Do you need life insurance? The answer is, maybe. Everyone's situation is different. Life insurance should be used as a tool, not a retirement plan. Life insurance should be used as protection to replace lost earnings due to the death of a loved one.
Generally, there are two types of life insurance: Term and Whole Life.
A Term (temporary) policy should be a tool to replace the earnings your family depends on, and you would have collected had you lived and worked. Term policies generally should cover you through your working life. Ideally, you would have enough money/investments/savings in reserves to take you through retirement. For example, if you are 45 years old, with a spouse and children at home, and you are the family breadwinner, you may want a 20 year term life policy to replace your income for the remainder of your working life, and ensure your family's lifestyle will not be altered financially upon your death. Term policies are usually very affordable, especially when purchased at a younger age, because younger people are not expected to die.
A Whole Life Policy is a permanent policy that you pay for your whole life. Some people are more comfortable to buy a whole life policy, because it will follow you through retirement, and it will build a cash value over time. These policies can eventually be cashed in, borrowed against, or may result in a larger benefit for your survivors. However, these premiums are usually more expensive. You might be interested in a whole life policy if you have a dependent (maybe a disabled family member) who will need additional financial support should you pass away during your retirement years, and they are dependent on your retirement income for their needs.
There are numerous variations of these two policies. To determine what best fits your needs, talk to your favorite insurance agent to see what is offered, then sit down with the New Perspectives staff to decide which best fits in your overall financial picture and future plans. We can help you solve the insurance mystery!