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Permanent Life insurance provides long-term protection as well as cash value accumulation on a tax-deferred basis. The cash values can serve as a valuable emergency fund in the future or as an education accumulation vehicle. These policies are intended to be kept for a long period of time, often to provide for the ongoing needs of a spouse or life partner. Permanent Life insurance is an umbrella term that covers several different types of insurance, the most common forms being Universal Life and Whole Life.
Which policy is right for you?
With programs offered through MTA Benefits, you can select from several forms of Permanent Life insurance. Whole Life is generally a fully guaranteed policy with guaranteed cash value accumulations, whereas Universal Life is usually a lower cost and more flexible policy, allowing the insured to vary both premiums and death benefits and still accumulate cash values. All policies offered are written through insurers who are rated ‘A’ or higher by A.M. Best.
Permanent Life insurance can be a good foundation in almost any life insurance portfolio. You may consider a combination of both permanent and term life insurance to meet all of your long-term needs.
How much life insurance do you need?
In a recent article in CNN Money Magazine, the question was posed as to how much insurance someone needs. There was no simple answer. Some financial planners say at least five to seven times your gross annual income. Others argue that you need twice as much in face value. That would mean a person making $50,000 a year should have anywhere from $250,000 to $750,000 worth of coverage or more.
Remember, the sole purpose of life insurance is to replace your income in case you die, so that your dependents can maintain their current lifestyle. Some factors to consider include whether the surviving partner will have childcare expenses if one partner is out of the picture or will your children be out of the nest soon? Do you have other assets on which to draw? These, and many other factors, influence the decision on how much coverage you need. Buying a Whole Life policy doesn’t necessarily mean you’re fully insured. Because of the investment component of Whole Life, the policies are much more expensive than term. Don’t simply buy less coverage as it defeats the purpose of buying insurance in the first place: to cover dependents.
Advisers with the MTA Life Insurance Program will help you figure out how much coverage and what type of policy you need.
For more information, contact Vista Financial Group at 888.646.1972.