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Death benefit protection

Posted August 14, 2013 in Advice Column, Ankeny

When you die, your loved ones may face many unexpected ex­penses, including doctor’s and medical bills, attorney’s fees, probate costs, income taxes, unpaid bills and possibly federal estate taxes. On top of these expenses will be the costs associated with your funeral, which can average between $7,000 and $8,000 today.

That’s why most life insurance experts recommend a minimum of $10,000 in life insurance coverage to provide this death benefit protection.

Loss of income is another harsh reality associated with an individual’s death. If others depend on your income for their well-being, you should consider purchasing additional life insurance to help replace your income. Life insurance experts recommend a minimum of five to six times your annual income in life insurance coverage.

Term life insurance or permanent life insurance. What’s right for you?
If you want to protect your family against the financial consequences associated with death, both term life insurance and permanent life insurance can meet your goal.

But the two life insurance products are very different. With term life insurance you purchase life insurance for a specified number of years. At the end of that time period, your life insurance coverage ends.

Often, term life insurance is less expensive to obtain than permanent life insurance. However, each time you renew a term life insurance contract, your premiums will probably increase. Premiums for term life insurance are based on your attained age at renewal.

Many people choose term life insurance when they need death benefit protection but are unable to pay the higher premiums of permanent life insurance. Later, when they can afford it, they convert their term life insurance to permanent life insurance. Term life insurance also helps you provide money if you die while still owing for a mortgage, car loan or other major debt.

If you’re looking for death benefit protection for your entire life, permanent life insurance can be the better choice. As long as you pay the premiums, the death benefit will always be there. And premiums for permanent life insurance usually remain the same throughout the life of the contract.

Most permanent life insurance plans offer a cash value in addition to the death benefit. The cash value is a sum in the contract that usually increases through the years on a tax-deferred basis under current tax laws. Some people borrow against the cash value to help pay for unexpected emergencies or college expenses, or to help supplement their retirement income.

*A registered representative. Securities offered through MWA Financial Services Inc., a wholly owned subsidiary of Modern Woodmen of America, 1701 1st Avenue, Rock Island, IL 61201, 309-558-3100. Member: NASD, SIPC.

Information provided by Modern Woodmen of America for Stoy Hall FIC, 201 S.E. Shurfine Drive, Suite 1, Ankeny, 515-289-4060,

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