P/L/R Explains Life Insurance

Childhood seems to last forever – when you’re the child.
That time seems to go a lot faster if you’re the parent.

So, to quote Kenny Chesney: Don’t Blink.

“…just like that you’re six years old, and you take a nap
And you wake up, and you’re twenty-five…

…A hundred years goes faster than you think,
So don’t blink…”*

Everyone wants to leave a legacy. We all have our own goals and aspirations, so the definition of “legacy” varies. Most of us just want to be sure that our loved ones have enough money to sustain them if we’re not here to provide.

The truth is that with a little planning and forethought, we can all leave a legacy of prosperity and abundance. That’s where life insurance comes in. It’s an essential part of any financial plan, and as with most financial plans, it’s best to get started early on.

Life insurance pricing is based on age, gender, and medical health. If you are young and in good shape, life insurance is relatively inexpensive because your risk of death is lower. As you get older or experience health issues, policies become more expensive.

There are different types of life insurance. Choosing the right coverage for your family can be complicated. Working with a trusted insurance advisor like one of the pros at P/L/R is essential to making the right choice.

Bill Lawrence, P/L/R’s President, says that “Our clients often underestimate how much life insurance they need. Many employers provide a standard life insurance benefit of two or three times your annual salary and leave you to think that’s adequate coverage, but it’s not.

“A married parent of two children, making an average salary, with a spouse, a mortgage, car payment(s), student loans and normal expenses actually needs $500,000 to $1,000,000 in life insurance. Most families need to lean toward the higher end of that range.”

Here is an easy to understand breakdown of your options:

First option: Term Life (also known as Level Premium Term).

  • Term Life is purchased for a specific amount of time (the term)
    • 10, 20 or 30 years, for example
  • Policies pay a flat death benefit if you die during the term of the policy
  • If you outlive the term of the policy, the policy doesn’t pay anything
  • Term Life policies are less expensive than Whole Life policies because
    • There is no benefit when the policy expires and
    • There is no benefit once you stop paying the premiums

Term policies from quality insurance companies, like those we represent at P/L/R, can be converted from Term to Whole Life. This is important because, in most cases, the policy can be converted regardless of your medical condition.

If you allow the term insurance to cancel after you have a serious medical diagnosis or terminal diagnosis, you won’t be able to purchase another policy. The risk to the insurance company will be too high. At P/L/R, we encourage those conversions.

According to Lawrence, “An option is to purchase the bulk of your death benefit in term insurance. You can supplement with a smaller whole life policy and invest the difference in premium as part of your long-term financial strategy.”

Which brings us to the second option: Whole Life (also known as Permanent Life).

Whole life policies are a more permanent part of a long-term financial plan, and as such, they cost more than term life policies. The additional investment is worth it because:

  • Whole life is a permanent benefit, as long as you continue to pay the premiums.
    • Before you purchase this policy, you’ll receive an illustration that shows
      • The premium
      • The guaranteed rate of return
      • The current rate of return
      • Sometimes, even the mid-point between the two
    • You can see how much cash will be in the policy at the end of each year
    • You can borrow the cash and pay interest on the money you borrow
  • Or you can surrender the policy and take all the cash at any time
  • The premiums are usually the same for the duration of the policy
  • As long as you pay the premiums, the policy will stay in force for your lifetime (or until it’s set to expire, usually at age 100).
  • The best time to invest in a whole life policy is when you’re young and healthy.
  • If you cash out, any cash you receive over the amount you’ve invested in whole life will be considered regular income, so it’s essential to be aware of potential tax implications.

At P/L/R, we’re here to help whenever you need us. We’ll help you decide whether term or whole life coverage is best for you; help you determine the amount of coverage you need and stay with you from start to finish. Because life goes by faster than you think. So – don’t blink. Contact us today at info@plrinsurance.com and experience insurance the way it’s supposed to be.

P/L/R Insurance is a trusted independent insurance agency serving Bloomington, Tremont, and Central Illinois families and businesses since 1988. Visit our website for a complimentary quote or policy review or call us directly at 309.827.0007 if you have more detailed questions.

*From the album Just Who I Am: Poets & Pirates · Copyright: Writer(s): Chris Allen Wallin, Casey Michael Beathard Lyrics

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