WHY LIFE INSURANCE?
Life insurance is important, as it protects your family and lets you leave them a “non taxable” lump sum at the time of your death. We always say, “not once has a spouse ever complained their significant other had too much life insurance”. At the Blauman Insurance Agency life insurance is our most essential product. It is our primary focus because no matter what your financial situation is it is guaranteed capital infused into the next generation. Generally, the idea of life insurance is to provide peace of mind by assuring that financial loss will be alleviated in the event of one’s death.
When it comes to life insurance there are two types of coverage. Whole life and term life... also referred to as “term and perm”. Temporary and permanent! Term life is temporary coverage that covers you for 10, 20 & 30 years. It has a level premium for the entirety of the term but builds no cash value. Whole life is permanent which means it covers you until 99 years of age and the premiums you pay go into the stock market and grow at an indexed level which builds cash value. Life insurance is based on two main variables, your age and your health. Therefore, it is most optimal to get a policy started and lock in a low rate when you are young! The amount of coverage you need depends on several different factors like potential lost income for your spouse, how much debt you have, your assets, and your family dynamic.
Cash Value: A portion of your policy’s premium that earns interest and may be available to withdraw or borrow against in case of necessity. As you continue to pay premiums on the policy and earn more interest, the cash value accumulates over the years.
334 Wells Ave S. Suite B
Renton, W.A. 98057
Mon-Fri: 8:30am - 5:30pm
Do I want WHOLE life or TERM life coverage?
Whole life is “permanent” insurance and covers you until the age of 99. Whole life products allow you to allocate your premium in indexed accounts to help you grow cash value. The product we are most passionate about and recommend is the IUL (Indexed Universal Life). Unlike investing in the actual stock market, the IUL has a floor of 0% growth that will protect you from any market related losses. The better the indexes do, more interest will accrue and build cash value. This also gives you living benefits. Once cash value has accrued you are able to borrow against it out of necessity, or if needed you can simply withdraw from your cash value (which is only recommended out of absolute necessity). Policy face amounts start as low as $50k and we recommend you get an IUL going at a young age no matter the face amount just to start building that cash value. As life events happen, we like to add term policies on top of your whole life policy to account for fixed amounts like car loans, home loans, school for children and other potential expenses. Whole life insurance is more costly than term, but the investment portion provides a nest egg later in life that can be utilized if needed. We work tirelessly to help our clients navigate these products so they can leave a legacy instead of a bill!
Term life insurance is bought in 10, 20- & 30-year increments. After that period expires, coverage at the previous rate of premiums is no longer guaranteed and the client must either forego coverage or potentially obtain further coverage with different payments or conditions. It is a very cost-effective approach because the premiums are guaranteed not to increase for the extent of that term. We call this a level premium in that it does not rise. Term products do not build cash value. It is essentially “temporary coverage”. It fits certain needs like a 30-year mortgage in a very economical way. Ideally, I like to see a client get a whole life policy when they are young and then stack term policies on top of it as needed. Whole life is 3-5 times more expensive than term life. This is why term is ideal if you need to carry a larger amount of insurance. Also ideal if someone is coming to the table late or with conditional health and have essentially priced themselves out of the whole life market. Medical exams are required with larger amounts. To learn more about term insurance call us today!