There are several different kinds of life insurance, but at its core, life insurance provides a cash benefit to your named beneficiaries if you pass away while the policy is still in force. When you buy life insurance, you are buying a set amount of insurance coverage (the “face amount”) in exchange for paying policy premiums to the insurance company.
Proceeds from a life insurance policy are usually income-tax free, and can be used to help make up for lost income, fund children’s or grandchildren’s education accounts, provide liquidity to pay estate or inheritance taxes, leave a charitable legacy, or for any other purpose.
Two of the most common types of life insurance are term life and universal life. With term life insurance, you are essentially buying coverage for a set, specific number of years. If you pass away during that period, your loved ones will receive the policy’s death benefit.
Universal life policies work a bit differently, and are intended to be permanent life insurance solutions. As long as you pay enough in premiums to keep the policy in force, the insurance company will pay the death benefit to your named beneficiaries after your death. Universal life policies also include a “cash value” component, which allows you to set aside extra funds inside the policy. If you need to draw on those funds, most policies allow for policy loans and withdrawals. The cash value can also help provide a measure of flexibility with your insurance policy premiums. If you are not able to make your premium payment for a given month or quarter, the cash value can be used to keep your insurance coverage in place.
Everyone has different needs and goals when it comes to how much life insurance they need and what they want it to accomplish. At Hurley Agency, we are experienced at placing all types of life insurance policies, including for “rated” or higher-risk individuals and complex estate and trust uses.