225 National Financial Literacy Month - Day 18 - Insurance & You

One can say the difference between an individual and or family
with insurance and those that don't are like night and day,
because of the bottom line on your financial standing. Paul
shares insight on the difference between term insurance and whole
life insurance and the difference it can make for your life and
family.


What is term life insurance? Term Insurance covers you for a set
period of time or term, anywhere from5 to 30 years, as long as
you pay premiums, this is key. If you die during that term, your
beneficiaries receive the payment amount of a $25k and or $100k
term policy. 


If you’re alive when the policy expires, the insurance coverage
ends. You no longer pay premiums and you don’t receive any payout
from the insurance company. A convertible term policy allows you
to switch to a whole life policy when your term insurance ends,
but your premium will rise as a result of your age and health at
the time. 


What is whole life insurance? Whole Life Insurance covers you for
your entire life and pays the insurance amount to your
beneficiaries. Varieties of whole life insurance include straight
life, universal life, variable life, and variable/universal life.
Talk to CPA or an insurance professional for more details. 


Unlike a term life policy, whole life policies feature an
investment element. Your insurance premiums include not only the
cost of the insurance but also an additional amount that is
invested and that grows tax-deferred over the life of the policy.
You can borrow against this amount and any loans are deducted
from the benefit your beneficiaries receive when you
die.  


A few questions you must address prior to getting an insurance
policy:


1. How much does it cost? The monthly premiums for a term life
insurance policy are generally lower than for a whole life
policy. One concern, though, is that if you want a new term life
policy when the old one expires, you may have to pay more. That’s
because life insurance premiums are based at least in part on
your age and health. For example, let's say you buy a 30-year
term life policy when you are 30 and the term expires when you
are 60. If you decide to get another policy you will pay more
because you will be a higher risk from an insurance
 standpoint.


2. What are your goals? If you would like to use insurance to
give your heirs a certain amount when you die, whole life is the
most reliable option. Remember, though, that insurance is not
your only investment choice and that you may get better returns
from another investment vehicle, such as stocks and bonds or a
wide range of other investments.


3. How should you choose your insurance company? Companies like
A.M. Best, Fitch Ratings, Moody’s Investors Service and Standard
& Poor’s Ratings Services rate insurance companies based on
their financial stability. These ratings can be found online. You
can also turn to your state insurance company for information on
complaints against different insurance companies. 


The bottom line is that it is better to have life insurance in
your portfolio. Talk to an insurance professional about this to
get even more insight as it pertains to your unique situation.


Learn about Paul Lawrence Vann's digital Financial Fitness
course, it is being offered at a 50% discount throughout the
month of April, National Financial Literacy Month, here is the
link:  https://bit.ly/3dbperG