THREE ANSWERS TO LIFE INSURANCE QUESTIONS
The idea of life insurance can be traced back to ancient Rome. Roman Law adopted a type of bottomry contract that originated with Babylon merchants. In Rome burial societies paid for the funeral costs from monthly dues collected.
While a historical lesson may not have been a burning question, it is interesting that the concept of insurance has been around since early 4000–3000 BC with Babylon’s bottomry contracts.
The three most asked questions we receive about life insurance policies are
- What is Universal Life Insurance?
- How much life insurance do I need?
- Will I be able to receive cash from my life insurance policy?
Many new parents and grandparents select opening a life insurance policy as a way to provide a valuable asset to the child. As children grow older they can use the policy for resources as they enter new phases in their lives like going to college or purchasing their new home.
What Is Universal Life Insurance
Universal life is a permanent life insurance policy. Although permanent, it provides flexibility to adjust both payments and payout requests. The premiums are flexible and payments can be adjusted over time. There is also flexibility in the ability to increase or decrease death benefits.
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An added benefit to Universal Life Insurance is the opportunity to borrow against a portion of the policy’s cash value. When the unexpected happens in life, the ability to borrow can provide some peace of mind to you and your family. Riders (an optional add-on to an insurance policy) can help you customize the policy with options like disability waivers, extending coverage, and providing coverage for your children.
When the unexpected happens in life, the ability to borrow can provide some peace of mind to you and your family.
How much life insurance do I need?
Life insurance helps not only provide for our final expenses but also to help ease some of the financial strains when the time comes. It can be overwhelming trying to decide how much coverage your family will need. Some important questions to ask include.
✔ How much annual income would you like to provide, if you were no longer here? Think about how much your family will need to cover daily living expenses.
✔ How many years should income be provided after you’re gone? How long will your family need the extra income (consider the ages of your children or other factors)?
✔ How much debt would you like to pay off immediately? Consider things like the mortgage, private student loans, and other debts.
✔ How much would you like to leave for childcare? Care.com can help with this calculation.
✔ How many children need college or trade school funding?
✔ How much would you like to set aside for an emergency fund? An ideal amount is three to six month’s worth of expenses.
Feeling overwhelmed? Use this life insurance needs calculator from lifehappens.org here
Will I be able to receive cash from my life insurance policies?
Life insurance builds cash value over time. This cash value is an asset that you can withdraw from when the situation calls for it. Examples can include paying for college, covering unexpected health care expenses, making a down payment on a new home, or similar.
By starting a life insurance policy young, recipients build a greater cash value to withdraw from when a life event calls upon it. Many new parents and grandparents select opening a life insurance policy as a way to provide a valuable asset to the child. As children grow older they can use the policy for resources as they enter new phases in their lives like going to college or purchasing their new home.
If you have any questions regarding how you can be better prepared for coverage please contact me at 740–446–6018 or loralee.carmichael@american-national.com
