Insurance for Your Whole Life

Most American adults with life insurance coverage carry only the group coverage offered by their employers.¹ Although employer-sponsored life insurance tends to be fairly affordable, there’s one drawback that you cannot ignore: Such coverage usually terminates when you leave.

If your situation calls for life insurance coverage that extends beyond your working years, it might be time to consider whether permanent life insurance would be appropriate.

Stability for You and Yours

A permanent policy, sometimes called cash-value or whole-life insurance, generally remains in force for the life of the insured as long as the premiums are paid. Once the policy is in force, the premiums typically remain level. This can help ensure continued protection as you age, even if your health should take a turn for the worse.

The death benefit paid to your beneficiaries is usually not subject to income taxes. It can be used to help pay estate taxes, final expenses, medical bills, and other debts without the need for your heirs to sell off valuable holdings in a time of distress.

Financial Safety Net

In the early years of a permanent life insurance policy, the premiums are usually higher than the actual cost of insurance protection. The insurer invests the excess premiums, and the policy can accrue cash value. Policyholders may borrow against the accumulated cash value for any number of uses, such as supplementing retirement income, paying off a mortgage, and sending family members to college.

Access to cash value is through withdrawals or loans. Policy loans will reduce the cash value by the amount of any outstanding loan balance, plus interest.

The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications.

Will the need to provide for your loved ones in the event of your death ever really diminish? If the answer is no, then you may want to consider the lifelong protection of whole-life insurance.

1) LIMRA International, 2008

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by StoneRiver–Emerald. © 2009 StoneRiver, Inc.