Choosing a life policy can sometimes be confusing not knowing the difference between a variable annuity and variable life insurance policy.
Cooke Insurance Agency can help with a variety of resources that help explain differing types of insurance and related products, how they work, and when you should consider buying them.Life Insurance and Retirement
Life insurance protects against financial loss due to the death of the insured. Annuities provide the security of a lifetime income. These financial products are tailored to meet the needs of people at different stages of their lives.
Two Popular Types:Term Life Insurance
Term Life protects against Financial loss to beneficiaries due to death of the inusured. Policyowners pay a periodic premium and insurers pay a stipulated death benefit if the insured dies within the coverage period. Premiums are lower than for permanent insurance, and the policies have no cash value. Annually renewable policies initially carry lower premiums, but these premiums rise each year and can become expensive later in life. The insurer will limit coverage up to a certain age. Level-premium term policies charge the same periodic premium through the entire contract. These contracts may cover 10, 20, 30 or even more years, though level premiums are not always guaranteed for the entire paying preiod.
Term insurance is most often appropriate for young families that need to protect income. The younger and healthier an insured is, the less cost of term insurance.
Life insurance protects beneficiaries and aids in financial planning. Annuities can protect against bear markets and can be turned into personal pension plans. Annuities can help steady your financial ship when staying afloat is more valuable than sailing the fastest.Whole Life Insurance
Whole life guarantees the death benefit will be paid as long as the premium is paid each year. The premium generally remains constant and is set high enough at time of purchase that it builds cash values in early years to help pay for higher insurance costs later in life. Participating whole life policies also offer upside potential. A participating policy allows owners to receive portions of the insurer's surplus each year in what is called a policy dividend. Owners may take the dividend in cash or reinvest it in the policy. Reinvesting can create larger dividends in ensuing years and raises the death benefit. Owners may access the cash value of a policy through loans, but loans may decrease the death benefit until they are paid back. Many whole life policies endow at age 100, meaning if the insured is still alive, the owner receives an amount equal to the death benefit less any outstanding loans. However, an endowment is subject to income tax on the amount that exceeds the policy's cost basis, while a death benefit is tax-free.Who needs whole life
Those who need guaranteed coverage for life, either to protect a beneficiary or to help pay for estate taxes or other costs incurred at death. Also, those who want their life insurance costs to remain predictable and affordable throughout life.Who may not need it
Anyone who may not need life insurance or those who need coverage only for a certain time - for example, a young family that needs protection only while children are young and until retirement income is saved.
whole life insurance may be appropriate at any stage of life, even at older ages. Contact Cooke Insurance Agency to find what best serves your lifes' purpose.