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If you have financial obligations (a mortgage, bills, support for  children, education payments, etc.) that would continue if you were  gone, you most likely need life insurance.

From assessing ongoing  cash flow needs, we can determine the amount of insurance required, the  type of insurance needed, and for how long it will be needed.  There  are, of course, other reasons to purchase Life insurance including:

  • to settle a large outstanding tax bill on an estate after death
  • to donate a tax deductible amount to a charitable or religious institution
  • to provide some income in retirement
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There  are two main types of Life insurance: Term and Permanent.

 

Term  insurance could also be described as temporary insurance –it is  purchased for specific lengths of time such as ten or twenty years. At  the end of each term you can choose to renew if you need to and the  insurance costs will change to reflect the new age of the insured and the increased risk. As  insurance costs increase with age, the insured is faced with significant  increases in their premiums with each renewal. The best time to get  insurance is before you need it as the rates are very affordable when  you are young and healthy. For example, a 35-year-old male non-smoker  would pay about $40/month for $500,000 20-year term policy (smoker rate about $100/month). A 50-year-old male,  non-smoker, would pay about $155/month for the same coverage.

 

Permanent  insurance lasts for the rest of your life and has more flexibility in  terms of cost and can offer an investment component. The cost is often fixed  throughout the life of the insurance policy.  For anyone considering life  insurance for longer than 25 years (for estate planning purposes, for  example), it is wise to give serious consideration to permanent  insurance.  Although more expensive than term insurance initially, over  the long term, permanent insurance becomes very cost effective. For example, the 35-year-old male non-smoker could pay between $115-$190/month for a $250,000 life insurance policy that would never expire or increase in cost (but may increase in benefit as well as accessible cash value).

 

For information about your specific situation, feel free to contact us.