Most people are familiar with life insurance products such as term, whole life and Universal Life. On the other hand, very few people understand living benefit insurance products and how they can be used to protect against loss of income. Disability, Critical Illness, and Long-Term Care insurance are all essential elements of a well-rounded financial plan. Unfortunately, however, most people don’t understand these products well enough to know which type they should have.
There are two main types of life insurance, Term and Permanent. Term insurance provides “temporary” coverage for a set period of time, with set premiums determined at the time of purchase. When the term of the policy expires, the coverage also expires. Permanent life insurance combines lifetime coverage (as long as premiums are being paid) with an investment component. The premiums for these policies are typically greater than term insurance but they also provide greater long-term value. This category includes Whole Life, Variable, Universal Life, Variable Universal Life, and Survivorship policies.
In addition to life insurance needs, you need to assess your situation to determine if you have a need for any other types of insurance:
Disability Insurance – designed to replace income if you are unable to work due to injury or illness.
Critical Illness Insurance – these policies will pay a lump-sum benefit, usually 30 or 60 days from the onset of any one of certain specified medical conditions, diseases or ailments.
Long-Term Care Insurance – this provides a daily benefit to cover the cost of a care facility or having a registered nurse visit your home if you are unable to perform certain activities of daily living.
There is a large variety of insurance coverage available today and it can be extremely difficult for the average person to know which policies fit their situation. That is why it is essential to have a qualified insurance specialist analyze your situation to determine your particular insurance needs: type of coverage, benefit level, duration of the policy, etc. Having a comprehensive insurance review completed allows you to rest easy knowing that when health problems arise you and your family won’t be left holding the bag.