Life in­sur­ance 101: What you need to know

The Boyertown Area Times - - COMMUNITY - This col­umn was pre­pared by Thrivent Fi­nan­cial for your lo­cal rep­re­sen­ta­tives’ use. Thrivent Fi­nan­cial is rep­re­sented in the Kutz­town area by East Berks Group, which in­cludes Scot R. Guldin and Steven T. Bond at 102 Tom­a­hawk Drive, Kutz­town, Phone 610-683

Life in­sur­ance; ev­ery­one says it’s im­por­tant but it can be a dif­fi­cult topic to talk about and even more dif­fi­cult to un­der­stand. How­ever, it is a crit­i­cal topic to grasp be­cause of its im­por­tance when build­ing a fi­nan­cial strat­egy.

Life in­sur­ance is a cor­ner­stone of a sound fi­nan­cial strat­egy. It can help pro­vide for the peo­ple and or­ga­ni­za­tions you care about. Choos­ing the right life in­sur­ance so­lu­tion makes a dif­fer­ence in the fu­ture of your loved ones, and gives you a sense of re­as­sur­ance know­ing they’ll be taken care of. Here’s a quick primer from Thrivent Fi­nan­cial on some of the most com­mon types of life in­sur­ance.

Types of Life In­sur­ance

Term Life In­sur­ance – Tem­po­rary life in­sur­ance that of­fers sim­ply a death ben­e­fit and is gen­er­ally less ex­pen­sive than per­ma­nent in­sur­ance. It’s ideal for short-term life in­sur­ance needs, like when you are rais­ing a fam­ily, pay­ing off a mort­gage, or start­ing a busi­ness.

Whole Life In­sur­ance – Per­ma­nent life in­sur­ance that gives you a guar­an­teed death ben­e­fit, guar­an­teed level pre­mi­ums, and guar­an­teed cash value that in­creases each year. The guar­an­tees are con­tin­gent on all pre­mi­ums be­ing paid and no loans or changes be­ing made to the con­tract.

Blended Life In­sur­ance – Per­ma­nent life in­sur­ance with added flex­i­bil­ity. It lets you “dial-in” your pre­mium to the level of whole life and term in­sur­ance de­sired. Of­fers life­time pro­tec­tion through a blend of whole life in­sur­ance plus term in­sur­ance and paidup ad­di­tional cov­er­age.

Univer­sal Life In­sur­ance – Per­ma­nent life in­sur­ance that al­lows you to in­crease or de­crease your death ben­e­fit and your pre­mium is flex­i­ble; sub­ject to any lim­i­ta­tions in the con­tract. Ac­cu­mu­lated value in a univer­sal life con­tract earns in­ter­est at a cur­rent rate, with a min­i­mum rate stated in the con­tract.

Vari­able Univer­sal Life In­sur­ance – Per­ma­nent life in­sur­ance that gives you a flex­i­ble pre­mium and the po­ten­tial to build ac­cu­mu­lated value. How­ever, death ben­e­fits and other val­ues may vary, be­cause you di­rect how the cash is in­vested among the in­vest­ment port­fo­lios of­fered. Do re­mem­ber that the in­vest­ment per­for­mance has no guar­an­tees and could lose money and re­mem­ber to re­view the prospec­tus of­fer­ings of any in­vest­ment de­ci­sions you make.

How Much Life In­sur­ance Should You Have?

When pur­chas­ing life in­sur­ance, think about your goals for your over­all fi­nan­cial strat­egy, your eco­nomic value to your loved ones, as well as your wishes for your sur­vivors.

First you’ll need to cal­cu­late your eco­nomic value. To cal­cu­late your eco­nomic value- the value of your fu­ture earn­ings over your life time­con­sider the fol­low­ing fac­tors:

Your cur­rent an­nual earn­ings.

The amount your an­nual earn­ings may in­crease.

How many years you plan to work un­til re­tire­ment.

The rate of re­turn you ex­pect your in­vested as­sets to earn.

You can use these num­bers as a start­ing point when you sit down with a fi­nan­cial pro­fes­sional to de­ter­mine the level of cov­er­age you might need. Another key fac­tor is the con­sid­er­a­tion of how much of your fu­ture eco­nomic value you want to re­place in the event of your death. This will de­pend on the fi­nan­cial goals you set for your­self and your sur­vivors.

Life in­sur­ance is an es­sen­tial part of any healthy fi­nan­cial pro­gram. It is es­sen­tial that you choose what’s right for you and your sit­u­a­tion and that you plan ac­cord­ingly with a li­censed pro­fes­sional.

Steven T. Bond

Scot R. Guldin

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