Trinity Life Insurance
The purpose of life insurance
We all have a responsibility to protect those who depend on us with a sufficient amount of life insurance protection. Life Insurance is the cornerstone of your family’s financial security. It can provide those who are left behind with a lifetime of financial security.
In its most basic form, life insurance offers security in the event of your death. Like all insurance, life insurance protects your family from the risk of financial ruin. It provides your dependents with the necessary funds to settle your financial obligations and to cover the loss of income created by your death.
Buying life insurance isn’t like most other purchases. When you pay your premiums, you are buying protection and financial security for your family or business that only life insurance can provide.
The types of life insurance are categorized as permanent or term insurance. Both offer basic coverage, but for different time periods. The cost of term life insurance is usually much lower than permanent insurance.
However, price should not be the deciding factor, rather your family’s security should be. So, take the time to read through the details of each type of insurance while weighing your needs and each policy’s benefits.
Whole Life Insurance
What is it?
Whole Life is the most basic type of permanent life insurance. Depending on your age and health, your premium will purchase a specific death benefit and produce a specific cash value, which are guaranteed for the life of the policy as long as your premiums are paid. Whole life premiums, while higher than term premiums, are guaranteed not to increase. Premiums / rates are usually higher than term insurance in the first few years, but will be much lower than what term would cost had you continued to renew it in your later years. Over time, whole life insurance may be more economical than term insurance since premiums do not increase with age and the policy builds cash value.
Who’s it for?
- want to ensure that you have a life insurance policy in place for your entire lifetime.
- prefer the high degree of safety provided by the policy’s guarantees.
- are attracted by the policy’s ability to build tax-deferred cash values.
- like to know that their premiums will never increase.
- Policy loans and withdrawals provide access to your cash value.
- If you cancel the policy, the accumulated cash value is yours to use as you wish. Taxes may apply.
- Premiums are guaranteed not to increase over the life of the policy.
- A minimum death benefit is guaranteed.
- The policy’s cash value may be converted into cash or an annuity.
- The cash value is guaranteed to grow at a specified, minimum rate.
Some Drawbacks to Consider:
- Premiums are initially more costly than term premiums, although they remain level for the life of the policy.
- Unlike term insurance, whole life insurance offers no conversion option.
- Loans, withdrawals and any unpaid loan interest generally reduce the death benefit, which could leave beneficiaries inadequately protected.
Term Life Insurance
What is it?
Term insurance is generally the least expensive and least complicated type of life insurance. It provides insurance protection at a low cost for a specified period of time, such as 10, 15, 20, or 30 years. If you die within the term period, a death benefit is paid to your beneficiary. Once the period for the policy runs out, the life insurance coverage expires. There is no “accumulation” element, or cash value with term insurance. Some policies can be automatically renewed at the end of the coverage period, and some can be converted to permanent insurance without the need for a medical exam.
Who’s it for?
- have a temporary need for life insurance protection.
- need a large amount of insurance protection but have limited funds.
- want to supplement their permanent life insurance.
- have specific business needs (e.g., business owners who want to cover the life of a key employee who has a set number of years until retirement).
- It provides insurance protection for a low cost (at least initially).
- If your needs change, most policies allow you to convert your term policy to a permanent life insurance policy without having to take a medical exam or provide other information about your health.
- Term insurance is a good way to supplement other coverage when you have added financial responsibilities for a given period of time (e.g., mortgage, college expenses).
- Death benefits are generally received free from income tax.
Some Drawbacks to Consider:
- Premiums generally increase with age and they could become unaffordable later in life.
- There is no cash value element, so you miss the tax-deferred cash value of permanent life insurance policies, such as Whole Life.
- If you die even one day after the term and the policy expire, your beneficiary receives nothing.
Reevaluate Your Needs
Once you’ve taken the step of purchasing life insurance, take the time to reevaluate your needs periodically or when major changes occur in your life. Here are a few reasons you might need to reevaluate your coverage:
- Your family grows.
- You begin caring for aging relatives.
- You purchase a home or business.
- Your income changes.
Life insurance is a way to care for your loved ones after you are gone. Learn as much as you can before you purchase a policy. This will help ensure your estate and your family will have the best protection you can afford.