The type of life insurance that is the best type and design for you depends on what your financial goal in purchasing life insurance is meant to accomplish.
If your goal is to leave a lump sum of money for your beneficiary or beneficiaries if you were to pass away within a certain term of time, say 20 years, then Term Life Insurance might be a good fit. As an example, if you are now 30 and you are providing your family with income which helps them pay for the family’s monthly expenses which will change in 20 years from now then you would consider a 20-year Term Life Insurance policy to replace your income if you passed away within the next 20 years.
If you are 50 and want to make sure, no matter how long you live, you want to leave your family a lump sum of tax free money when you pass away then you might be interested in purchasing a Universal Life Insurance Policy. With the proper design, the premium you pay for one of these types of polices does not change no matter how old you get.
If you are interested in having a potential tax-free accumulation of money for use by you while you are alive then you would consider a Cash Value Life Insurance Policy. These types of policies have significant tax advantages when designed properly. As an example, let’s say you are 45 years old and need to save money to use in your retirement. You would purchase a Cash Value Life Insurance Policy which would accumulate money and grow by way of a policy dividend. When you are in retirement and need money, if you take a distribution from your Cash Value Life Insurance Policy in the proper way you will not have to pay taxes on the distribution.
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