Three Great Benefits of Permanent Life Insurance

Permanent Life Insurance
Permanent Life Insurance

Permanent life insurance tends to get some bad press, mainly because it is misunderstood by “experts” who don’t how these policies work. I will be the first to admit that there are some bad performing whole life and universal life policies out there, but the opposite is true as well. That’s the way it is with most products. There are positives and negatives associated with most everything. Since permanent life insurance gets so much negative press, here are three positive features that often get over-looked.

Tax Free Death Benefit

As it stands now, death benefit proceeds payable to beneficiaries are income tax-free. Well, so is term insurance, but only permanent life insurance is guaranteed to be there when you die as long as required premium payments are made. The vast majority of term policies never pay out a death benefit because most people outlive the term. Actuaries know this and so do the insurance companies.

Tax-deferred Growth

The cash value build-up inside a life insurance policy grows on a tax-deferred basis. That means you do not pay taxes each year on the growth of the guaranteed and non-guaranteed cash values.

Living Benefits

A permanent life insurance policy allows you to take out loans or withdrawals from your cash value. Often called Living Benefits, you have easy access to cash which can be used for anything from supplementing retirement income, helping with a down payment for a house or just creating an emergency fund. There are different strategies for accessing the cash value with different implications, but if done correctly, it can be withdrawn tax-free.

The Future

Obviously, everything is subject to change in the tax law, but this is why you should be working with an experienced, licensed agent. If you would like to learn more about the ways permanent life insurance may benefit your financial situation, please give me a call at 360-452-9200.

Want more information? Please visit Matt Elwood - Allstate Insurance to get more information on the Allstate products and services I can offer in Port Angeles, Sequim or anywhere Washington State. 

Does My Life Insurance Policy Still Fit My Needs?

Couple reviewing their life insurance policy
Couple reviewing their life insurance policy

I have been selling life insurance for 10 years and over that time I have worked with hundreds of families. Everyone’s situation is unique, but the common thread is that life is all about change. Change is the one constant that keeps our lives interesting. Friends come and go, families grow and sometimes shrink. We move to different cities or even return back home. We get married and divorced. Our kids grow up and start families of their own.

With this constant change in our lives, it is important to review your life insurance once a year to make sure your policy still fits your needs. Here are a few areas of consideration.

Do I Still Have The Right Amount Of Insurance?

When you initially purchased your life insurance policy, you probably went through exercise with your agent to determine what the right amount of insurance for you and your family at that time. Some factors may have been the age of your children, planning for a possible college fund and also the amount owed on your mortgage or other debt.

So when was the last time your reviewed this amount? Was it 5 years, 10 years ago or even longer? Have your kids now grown up leaving you with less of a need for life insurance? Have you paid off that mortgage and no longer need so much death benefit? It may be that times are now tougher and you have had to take out a 2nd mortgage and need more insurance? Without doing a review with an experienced agent, your policy may not match your current needs

Do My Beneficiaries Need Updating?

This is a huge area of life insurance planning that often gets neglected. First of all, you should never leave life insurance proceeds to a minor child. The primary beneficiary should be your spouse or a responsible adult that will take care of your children and the money on their behalf should something happen to you. You should also meet with a local estate planning attorney to draw up a will and living trust agreement to ensure that things get handled properly and your financial affairs are in order.

Another area where I see beneficiary errors is after a divorce. It may be that you still want your ex as your beneficiary, but I can tell you that not everyone does. Maybe you are remarried and want to update your policy to your new spouse? There are countless scenarios, but you get the point. Just keep in mind, only the owner of a policy can make these changes.

Life Insurance policy
Life Insurance policy

Do I Still Have The Right Type Of Policy?

When you first bought your policy, it may have been that all you could afford was term insurance. Nothing is wrong with that, but most term policies have a provision that within a stated amount of time, you can convert your policy to a permanent type like Universal Life. The great thing is that you can do this usually with no exam if you are within the given time frame stated in the policy.

On the other hand, maybe you bought Universal Life from the beginning, but now you are having a hard time affording it. I have seen a lot of cases where people are stretched too thin and having to borrow against their policy too soon. There is danger in doing this because it will shorten the life of your policy and ultimately you may be just paying for really expensive term insurance. If this sounds like you, you probably do need term insurance without the costs of Universal Life.

September Is Life Insurance Awareness Month - LIAM

September is the perfect time to review your life insurance policy given the national campaign of LIAM. If you would like to set a time to review your policy with me please contact me at 360-452-9200

Want more information? Please visit my official Allstate Agency Website to get more information on the Allstate products and services I can offer in Port Angeles, Sequim or anywhere Washington State.

How Much Life Insurance Do You Need?

Welcome readers of the Peninsula Daily News! Life Insurance can be a complicated subject. You may be wondering how much life insurance I need? That is a great question with a lot of variables that are unique to you and your family. I have found that there is no ‘right’ amount of life insurance to own. Rather, it is what you want to have happen financially if you were to die prematurely. Typically, these wants fall into 3 major categories.

This family needs life insurance

Mortgage Life Insurance

Debt reduction is something you should consider when planning for life insurance. Think about would you want your spouse or family to be able to pay off your mortgage in the event of your death so they are not straddled with the payment? Life insurance provides income-tax free money to the beneficiary to pay for these types of scenarios. Other common debts include credit cards, student loans and Home Equity lines of Credit.

Income Replacement

If you are the sole breadwinner in your family with children, what happens to your children if you are no longer there? By providing enough life insurance to replace your income, you can be sure that they will be able to maintain their standard of living. Consider how much after-tax income you bring in each month minus the debt payments that will hopefully be gone. This will give you a starting point of how much you need to plan for. Other factors to consider are the age of your children and how long you want to provide for after you are gone.

College Savings Plan

Do you want your children to attend college without the burden of graduating with student loans? Depending upon how old your kids are and the school they wish to attend, you may need to budget $250,000 or more per child considering the inflation rate on attending college. There is a great website that will give you a lot of great information on how much college will cost you in the future.

These are just a few areas to consider when getting a life insurance quote. If you would like help going through your personal situation and determining the correct amount for your family, please contact me at 360-452-9200

Want more information? Please visit my official Allstate Agency Website to get more information on the Allstate products and services I can offer in Port Angeles, Sequim or anywhere Washington State.