At its most basic, life insurance is a promise you can make to your loved ones. You choose a life insurance policy, pay premiums to a life insurance company and if you die, a death benefit is paid to your beneficiaries to help take care of life’s expenses (e.g. mortgage, college tuition, taxes and more).
For many, the first life insurance purchase happens when getting married or starting a family. It makes sense because you suddenly find that someone else is now depending on you. You will find there are many types of life insurance. So which policy, or policies, should you consider? A good place to start is by answering the following questions.
How long will you need life insurance protection?
Time is a consideration when purchasing life insurance. Term life insurance is the simplest type. For a low out-of-pocket cost you choose the specified time, or term, of coverage. Permanent life insurance is designed to last for your entire life, provided appropriate premium payments are made.
Do you want to build cash value?
Do you need flexibility for your financial future?
One important way you can have flexibility is through riders. Riders are additional benefits you can purchase with your policy that allow you to adjust to changing circumstances.
Examples include a waiver of premium rider, which would pay your policy premiums if you’re unable to work because of a disability. An accelerated benefit rider would allow you to access death benefit values of your policy should you experience a chronic or terminal illness. The availability of riders varies by product and state, so be sure to review available riders with your financial professional.
How much and how long would you want to pay for protection?
There are two things to answer here. First, do you want to know exactly how much you’ll pay in premiums to keep your policy in force?
Universal life insurance is a permanent life insurance policy where you can, with some restrictions, adjust how much you pay in the future. Second, many permanent life policies require you to pay premiums over your lifetime, but there are policies where you only pay for a set period of time and the policy is then considered paid up. Your financial professional can help you explore the advantages to both.
Take this first step to find what fits you
As you can see, there are a lot of questions to consider when finding the right life insurance fit for you. A great next step is to meet with an AuguStar financial professional who can discuss your needs and goals and help you explore the possibilities life insurance can offer you.
Loans and withdrawals, if taken, will reduce the death benefit. Withdrawals (partial surrenders) and loans from life insurance policies that are classified as modified endowment contracts may be subject to tax at the time that the withdrawal or loan is taken and, if taken prior to age 59½, a 10% federal tax penalty may apply. Always consult with a tax advisor regarding your particular situation.
The optional Accelerated Benefit Rider provides for a partial acceleration of the policy death benefit in the event that the base policy insured is certified by a licensed physician as being chronically ill or terminally ill. By taking an accelerated death benefit payment, a lien is created against the policy death benefit. The lien accrues carrying charges at an adjustable rate we declare. The lien, including the lien carrying charges, will be deducted from the total death benefit otherwise payable to the policy beneficiary(ies) and will reduce the cash value available for policy loans, surrenders, or the exercise of any non-forfeiture option.
The required premium for the policy must still be paid even if an accelerated death benefit is taken. If an accelerated benefit is taken and the policy lapses or otherwise terminates, a taxable event may occur. Any death benefit provided by an optional Accidental Death Benefit Rider is not available for acceleration under this rider.
Any accelerated benefit you elect to take under this rider may be taxable. Consult your tax advisor on all tax matters. Adding the rider to a life insurance policy or the taking of rider benefits may affect eligibility for certain public assistance programs and government benefits.
The Accelerated Benefit Rider is not designed to be a substitute for long-term care insurance, health insurance, or nursing home insurance. Rider benefits and features may vary by state.
Products are issued by and guarantees based on the claims-paying ability of the AuguStar Life Insurance Company and AuguStar Life Assurance Corporation. Product, product features and rider availability vary by state. Issuer not licensed to conduct business in NY.