September is Life Insurance month. Life insurance can be invaluable and is not limited to older adults. From Newlyweds, to new parents, or those looking to protect their families, life insurance is an important tool to help ensure that loved ones are taken care of financially should the unexpected happen.
In recognition of Life Insurance month, here are five key points that young adults should consider as they start to plan for the future:
Whereas life insurance is associated with death, it is not all doom and gloom; rather it is an investment that offers priceless peace of mind. Whether it be a business partner or your parents, having life insurance ensures that those closest to you will not be paying off the debts that you owe after you pass.
Here are some common misconceptions:
Myth: All life insurance is expensive.
Fact: There are plenty of affordable life insurance plans out there.
Myth: It is only for those with dependents.
Fact: Even as independent adults, there may still be many people in our lives we would like to protect from debts we have.
Myth: Group life insurance through work is enough.
Fact: Jobs are not permanent, so a personal life insurance policy ensures there are no gaps in coverage.
Myth: Permanent life insurance is only for affluent individuals.
Fact: A permanent insurance plan is a great way to look after loved ones who may need lifelong or long-term medical care.
The two main types of life insurance offered are term and permanent, and there are pros and cons to each. It is important to understand the differences when deciding the right plan for your current situation.
Term life insurance is a good way to protect your family while keeping your expenses low. A key benefit of term insurance is that you can choose the period of insurance coverage.
On the other hand, permanent life can be an effective way to look after loved ones who may have special needs or need lifelong medical care, since the death benefit can be owned in a trust where you can appoint trustees to manage your assets after you pass. You do not need to commit to a permanent plan immediately, meaning you can start with term insurance and then move to permanent life insurance when you feel financially confident.
As the adage goes, two things are certain in life: death and taxes. Put another way, life is full of unexpected twists and turns. The last thing you want to deal with while facing the stress of providing for your family is the uncertainty of not having life insurance.
Group life insurance through work is a valuable perk, however relying solely on this can be risky. With the ever-changing economy and the ebbs and flows of the job market, it is becoming increasingly clear that putting all your eggs in one basket may not be beneficial. A group life plan will not protect your loved ones in the event of a layoff or job change. Having a life insurance plan outside of work will give you peace of mind, knowing those you care about are being looked after.
It is wise to weigh your options when it comes to insurance. Considering a term life insurance for a low cost to supplement what you may be offered through your job is an added safety net.
The best way to think about term insurance is that it is a temporary product for a temporary need. Term insurance is a popular choice among young adults with no health complications. The benefits of term insurance include affordability, flexibility, and coverage of crucial financial responsibilities. You can receive term insurance up to $1 million for as low as $25 a month (Preferred Non-Smoker, Male, age 35). This allows you to prioritize other debts you want to pay off while ensuring your loved ones are taken care of in unexpected circumstances.
Permanent life insurance, also called universal or whole life insurance, is a plan that provides coverage for the insured's entire lifetime, regardless of when they pass away. The benefit of choosing permanent life insurance over term is the guaranteed death benefit (or payment) received whenever an individual dies. Moreover, the insured can withdraw funds from this account at any time without penalty up to the amount of premium you have paid into the policy; if you were to withdraw the entire cash value, you would be taxed on any gain over the amount of premium you put in. Alternately, after withdrawing the amount of premium you put in, you can borrow the remaining cash value at no to low-interest rates. Put simply, permanent life insurance offers the flexibility to withdraw or borrow funds in a tax-advantaged manner, at any time for financial needs that may present themselves.
Figuring out where to start or how to find what life insurance plan is suitable for your current situation can be overwhelming. Moreover, life insurance is not a one-size-fits-all investment.
Rockland Trust has a team of advanced insurance specialists who will guide you through this critical process. Please reach out to your Relationship Manager to get started.