Life Insurance Options in Escondido

How do you decide what the best type of life insurance is for you? It's not always easy. That's where partnering with a professional insurance agent like Wismar Financial can come in extremely handy. Finding the right amount and type of life insurance coverage can be a nuanced process. The strategies can be as simple as a term life policy where your beneficiaries get a set amount paid out about death, or as complicated as a variable universal life policy that grows a cash balance and you can invest your cash assets inside of the policy. Let's dive in a take a look at each option.

Term Life Insurance

If you have any beneficiaries, whether that's a child, a spouse, a relative, or anyone else who relies on your income for support, chances are very good that you should have some amount of term life insurance. Term is the most affordable type of insurance. In most cases, an average person in their early 40's could get a $1 million term policy for under $100 a month. That's a little over $3 a day. Think what else you spend $3 a day on. Term insurance is like renting a home - it's yours for a specific amount of time as long as you continue making payments, but at the end of the term, you don't get to keep it and there's no equity (cash value) built from the premiums you've paid. Term is where most people should start with life insurance coverage and than build from there as needed.

Whole Life Insurance

Where term life insurance is like renting a home, whole life insurance is like buying a home. You own the policy for the rest of your life. That being said, whole life policy premiums can cost up to 10x that of term policies. That might seem like it's not worth it, but the real value of whole life policies is the cash value they build over time - similar to the equity you build in your home. For every premium payment you make, part of it goes to paying for the insurance and part of it goes to your cash account. This cash account can earn interest or be invested in indexed funds based on the type of policy you select. While the cost of insurance itself is much more expensive than term insurance, the cash value starts to offset that in later years. Typically, near year 15, the cash value has grown to equal or exceed the total amount of premiums you've paid for the insurance. Than the real magic begins! Because you can start taking loans from yourself through your cash balance, not pay any interest, and never have to pay the loan back! This, very simply put, is the basis for the Infinite Banking strategy. You can take out loans to use for anything - buy a car, down payment for a home, pay for school, or take that dream vacation! The money you take out simply reduces the eventual death benefit of the policy that will be paid out.

Indexed Universal Life Insurance

Otherwise known as an IUL, an Indexed Universal Life policy is an extremely powerful type of whole life policy. The Indexed part of it means that your funds in your cash account can be invested in index funds and grow based on the performance of the funds up to a certain point. How much your account is created is capped at a certain percent like 10% or 13%. The real magic of this type of policy is the floor. IULs will set a floor of 0% in most cases, which means if the market drops, you will never lose money. In this case your cash value is guaranteed to only go up - your just sacrificing some growth on the upside to guarantee there will never be a down side.

Long Term Care Insurance

Over 70% of people in the US over the age of 65 will need some form of Long Term Care. With nursing home expenses only increasing - typically faster than inflation - this can be a major expense and burden on a family's finances later in life if not planned for. This is where Long Term Care insurance or LTC comes in handy. Long term care can get expensive the older you get, so the best time to look into opening a LTC policy is in your early to mid fifties. You can lock in pretty decent rates at this age. Another great option for people in their 50's and 60's is to start a whole life policy with a LTC rider. Adding it as a rider makes it way more affordable than purchasing it on it's own. You just need to get the whole life policy early enough so the cost of insurance doesn't outweigh the benefit of adding the LTC rider. Someone in their early 50's who gets a whole life policy and LTC rider could be paying 75% less for the LTC for the rest of their life.

Final Expense or Guaranteed Insurance

These are smaller term policies anywhere from $10k to $50k that will be given to anyone despite their health issues. This can be used for people who are not qualified for regular insurance based on health problems or age. These types of policies are good to have in place so your family is not scrabbling to find money to pay for final expenses or trying to cut funeral costs. Worrying about money at this time of life shouldn't be the case. The family should know there's funds secured for this use so they can focus on celebrating the life of their loved one.

Life Insurance Needs Analysis

So, with all of these options. How do you know which is right for you? Well, you shouldn't have to do this on your own. Wismar Financial specializes in life insurance needs analysis and developing strategies that will work for you family today and help maintain your legacy for the future. If you live in Escondido or anywhere in San Diego county, connect with us today at: https://wismarfinancial.com/contact-us. We would love to work with you to help secure your family's future!