The Need for Life Insurance
Life insurance is an essential part of financial planning. The cash
provided by life insurance can also help ensure that your dependents are
not burdened with significant debt when you die. Many families today have
little savings outside of their 401(k)s. In 60% of married households,
both spouses work. If one spouse dies unexpectedly, many of the surviving
spouses struggle financially, some more than others. Life insurance
proceeds could mean your dependents would not have to sell assets to pay
outstanding bills or taxes. Proceeds from life insurance often prove to be
the largest asset these survivors have.
SGPIA has access to several
types of life insurance policies. The type of life
insurance you should choose depends on you and your family's personal
needs. Most employers provide life insurance however, coverage usually
stops when your employment ends. Some individual supplemental life
insurance provides coverage that can continue even if you change jobs.
Term Life Insurance
Term Life
insurance is usually considered to be an economical form of life insurance
and is used for providing life coverage for a specified period of time.
Many people choose term insurance when they have defined situations where
life insurance is needed only for a pre-determined length of time or
event. Examples of these situations are: for the duration of a mortgage or
other debt; to provide for final expenses; or to maintain a reasonable
standard of living for young families should a wage earner die
unexpectedly.
Universal Life Insurance
Universal Life
insurance provides a
death benefit and, over time, may provide you with a fund value you can
use for retirement, children's education or emergencies. You may vary the
premiums paid into your policy, you get tax deferred fund value
accumulations, competitive current interest rates and you are guaranteed a
minimum interest rate. Should you decide to borrow against the fund value
accumulated in your universal life insurance policy, the loan is not
dependent on credit checks or other restrictions. An important feature of
life insurance is that no income tax is payable on proceeds paid to
beneficiaries. Universal Life insurance provides a benefit for survivors,
yet while the insured is alive, continues to accumulate fund values for as
long as the policy is in force.
