Insurance

Straight Talk About Life Insurance (November, 2002)

Provided by L & C Insurance, Larry Schlappy, Agent



Congratulations! By setting your wedding date you’ve taken the first major step toward a wonderful, loving life together. Now, while you’re young and in good health, you should consider protecting each other against the pitfalls that life occasionally puts in our path. Let’s start by discussing life insurance products, which protect you from unnecessary hardship in the event of premature death.

Term Life … this is the least expensive type of insurance. It can literally be purchased for pennies on the dollar. Why is it called Term Insurance? Because it is issued for a “specific period of time”, or term. It can be year-to-year, or level for 10, 20, even 30 or more years. This means that the face amount AND the premium is guaranteed to remain the same for that period of time. At the end of the term you will usually have to re-qualify for a new term. There is a new type of term insurance product that even pays 50% or 100% of the face amount when a person is diagnosed with certain illnesses. Another company has a plan that will return your entire premium at the end of the term.

Permanent Life Insurance … here is where it can get confusing! Permanent life insurance includes Whole Life, Universal Life, Variable Life and Hybrid plans (part permanent and term). The premiums are higher than term insurance, but with most permanent products, they are guaranteed to never increase. These plans also build cash values at deferred interest rates. Many people have used the cash values in permanent insurance to buy a home, car, send a child to college, or even start a business! Whole Life has the most guarantees of any permanent insurance. Universal Life is a lower cost way to start out with a permanent plan. Variable Life is tied to Mutual Funds and has the fewest guarantees. I like to see young couples buy at least some permanent insurance because it is like building equity in a home instead of just renting.

But why do you need life insurance? Consider this … when a spouse (husband or wife) dies, those expenses that you have jointly incurred do not go away. On top of the personal grief a person feels at that time you also have to find a way to make the home or rent payment, car payment, utilities, pay for the funeral costs and possibly medical expenses that can be substantial, food, child care, and on and on.

This will now have to be done on one income, or possible NO INCOME if the breadwinner passed away. Which would you rather have to help you adjust during this period, a sympathy card or a check from your insurance agent for $100,000 or more?

Obviously there is much more to Life Insurance than what I can pass along here. If you’re interested in finding out more, contact my office at 928.778.6801, 800. 289.6801, or at landc@northlink.com.