Why do I want life insurance?
Create financial stability and build long-term wealth by balancing insurance and investments. Insurance needs are higher when investments and savings are low. The long-term goal is to "self-insure" by having sufficient assets so insurance is no longer necessary. Don't know about investing? We got you! We provide a free course: "how to build wealth with mutual funds" to all our customers.
How much should I get?
A general guideline is to apply for 10 to 12X your annual salary with a locked in rate that protects your family through expected children's independence--usually 15 to 25 years. ​
What type of life insurance is right for my family?
Term
For most young families, term insurance is the most appropriate. It is the least expensive option for locking in a guaranteed rate freeing you up to tackle debt and start savings. The downside to term insurance is that protection ends at the end of the term. Hopefully with disciplined savings and investing you are now well off and self-insured. If not, most term insurance policies offer options to extend coverage. Another downside is that you "rent" rather than "own" term insurance for a specific period. After the term ends, the premiums you paid to "rent" the coverage are no longer yours.
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Return of Premium
If you want less expensive insurance than whole life and you want your premium returned if you outlive your term duration, you want to explore "Return of Premium". Like straight term insurance, it is locked in for a specific period. Unlike straight term insurance, premiums (minus administrative costs) are returned at the end of the term if the insured is still alive. Compare costs with straight term before deciding which best meets your family's insurance needs.
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Accumulation IUL
For some who do not want to save, invest, and insure separately, an accumulation IUL rolls all these functions into one, at a cost. Insurance fees typically result in less equity and less flexibility than is realized than buying term insurance and investing the difference in premiums between term and IUL products. There are other costs to consider with IUL, so we recommend a live conversation with Michael if you want to explore this option.
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Whole Life
For those wanting to pass on tax-free wealth upon their passing, whole life is typically most appropriate. This "permanent insurance" typically guarantees a payout to beneficiaries through the 120th birthday of the insured. Because this type of life insurance almost always pays benefits (and pays higher commissions to selling agents), it is more expensive.
Michael Semonsky licensed insurance broker
Michael has been in the insurance industry since 2015. He believes people deserve to understand their life insurance. He has a Master's in Education with a concentration on communication. He enjoys baking, cooking, hanging out with his boys, and having conversations over coffee.
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