THE HAVE & THE HAVE NOTS... Understand your life insurance options and plan ahead your family is counting on you.
by Zelma Allen Money is so tight now, we often find ourselves choosing between paying the “must haves” and neglecting the “should haves.” Life insurance, unfortunately, is a perfect example of this. We all know that we should purchase some type of life insurance – at least enough to cover funeral expenses. However, many of us do not purchase the insurance, viewing it as one more thing demanding our hard earned money. Let’s face it, we have a lot more important bills to pay. A life insurance policy just seems like a waste. Life insurance is surely not a waste. It’s really not a “should have”, it is a “must have.” There are a few different types of life insurance coverages available to meet various needs and budgets. The two most common types are term-life and whole-life. But which one is right for you? The kind of insurance purchased really depends on individual circumstances. To know which will work best requires understanding the difference between the two.
Term Life Insurance
Term-life is exactly what the name implies, a life policy that ends after a specific period of time. Term life pays a death benefit to the beneficiaries you designate upon your death, but has no cash value. In other words, the policy cannot be “cashed in” or borrowed against prior to death. Of course, the policy only stays in effect throughout the time period if premiums are continually paid in a timely manner. Term-life insurance premiums are low relative to death benefits. The low cost means more death benefit is bought for the same amount of money when compared to wholelife. Term-life is ideal for insuring mortgages, a large loan for a business and short term loans. It’s also an ideal solu-
21 REWIND / Spring 2014