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Rosen Financial, Inc.Bradley J. Rosen, PresidentFinancial Professional1111 Lincoln RoadFourth FloorMiami Beach, FL 33139Phone: 786-276-2452Fax: [email protected]
Protecting Your Loved Oneswith Life Insurance
August 01, 2014
How much life insurance do youneed?Your life insurance needs will depend on a number offactors, including the size of your family, the nature ofyour financial obligations, your career stage, and yourgoals. For example, when you're young, you may nothave a great need for life insurance. However, as youtake on more responsibilities and your family grows,your need for life insurance increases.
Here are some questions that can help you startthinking about the amount of life insurance you need:
• What immediate financial expenses (e.g., debtrepayment, funeral expenses) would your familyface upon your death?
• How much of your salary is devoted to currentexpenses and future needs?
• How long would your dependents need support ifyou were to die tomorrow?
• How much money would you want to leave forspecial situations upon your death, such asfunding your children's education, gifts to charities,or an inheritance for your children?
• What other assets or insurance policies do youhave?
Types of life insurance policiesThe two basic types of life insurance are term life andpermanent (cash value) life. Term policies provide lifeinsurance protection for a specific period of time. Ifyou die during the coverage period, your beneficiaryreceives the policy's death benefit. If you live to theend of the term, the policy simply terminates, unless itautomatically renews for a new period. Term policiesare typically available for periods of 1 to 30 years andmay, in some cases, be renewed until you reach age95. With guaranteed level term insurance, a populartype, both the premium and the amount of coverageremain level for a specific period of time.
Permanent insurance policies offer protection for yourentire life, regardless of your health, provided you pay
the premium to keep the policy in force. As you payyour premiums, a portion of each payment is placedin the cash value account. During the early years ofthe policy, the cash value contribution is a largeportion of each premium payment. As you get older,and the true cost of your insurance increases, theportion of your premium payment devoted to the cashvalue decreases. The cash value continues togrow--tax deferred--as long as the policy is in force.You can borrow against the cash value, but unpaidpolicy loans will reduce the death benefit that yourbeneficiary will receive. If you surrender the policybefore you die (i.e., cancel your coverage), you'll beentitled to receive the cash value, minus any loansand surrender charges.
Many different types of cash value life insurance areavailable, including:
• Whole life: You generally make level (equal)premium payments for life. The death benefit andcash value are predetermined and guaranteed(subject to the claims-paying ability of the issuinginsurance company). Your only action afterpurchase of the policy is to pay the fixed premium.
• Universal life: You may pay premiums at any time,in any amount (subject to certain limits), as long asthe policy expenses and the cost of insurancecoverage are met. The amount of insurancecoverage can be changed, and the cash value willgrow at a declared interest rate, which may varyover time.
• Index universal life: This is a form of universal lifeinsurance with excess interest credited to cashvalues. But, unlike universal life insurance, theamount of interest credited is tied to theperformance of an equity index, such as the S&P500.
• Variable life: As with whole life, you pay a levelpremium for life. However, the death benefit andcash value fluctuate depending on theperformance of investments in what are known assubaccounts. A subaccount is a pool of investor
Your life insurance needswill depend on a numberof factors, includingwhether you're married,the size of your family,the nature of yourfinancial obligations,your career stage, andyour goals.
Page 1 of 2, see disclaimer on final page
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2014
These are the views of Forefield Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice.Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however,we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professionalservices. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult yourFinancial Professional for further information. Securities offered through NPC OF AMERICA (NPCOA), NPC OF AMERICA in FL & NY, MemberFINRA/SIPC. Rosen Financial Inc., MDRT, Beacon Financial Group, and NPCOA are separate and unrelated companies.
funds professionally managed to pursue astated investment objective. You select thesubaccounts in which the cash value should beinvested.
• Variable universal life: A combination ofuniversal and variable life. You may paypremiums at any time, in any amount (subjectto limits), as long as policy expenses and thecost of insurance coverage are met. Theamount of insurance coverage can be changed,and the cash value goes up or down based onthe performance of investments in thesubaccounts.
With so many types of life insurance available,you're sure to find a policy that meets your needsand your budget.
Choosing and changing yourbeneficiariesWhen you purchase life insurance, you must namea primary beneficiary to receive the proceeds ofyour insurance policy. Your beneficiary may be aperson, corporation, or other legal entity. You mayname multiple beneficiaries and specify whatpercentage of the net death benefit each is toreceive. If you name your minor child as abeneficiary, you should also designate an adult asthe child's guardian in your will.
What type of insurance is right foryou?Before deciding whether to buy term or permanentlife insurance, consider policy cost and potentialsavings that may be available. Also keep in mindthat your insurance needs will likely change asyour family, job, health, and financial picturechanges, so you'll want to build some flexibility intothe decision-making process. In any case, hereare some common reasons for buying lifeinsurance and which type of insurance may best fitthe need.
Mortgage or long-term debt: For most people, theirhome is one of their most valuable assets and alsothe source of their largest debt. An untimely deathmay remove a primary source of income used topay the mortgage. Term insurance can replace thelost income by providing life insurance for thelength of the mortgage. If you die before themortgage is paid off, the term life insurance paysyour beneficiary an amount sufficient to pay the
outstanding mortgage balance owed.Family protection: Your income not only pays forday-to-day expenses, but also provides a source forfuture costs such as college education expenses andretirement income. Term life insurance of twentyyears or longer can take care of immediate cashneeds as well as provide income for your survivor'sfuture needs. Another alternative is cash value lifeinsurance, such as universal life or variable lifeinsurance. The cash value accumulation of thesepolicies can be used to fund future income needs forcollege or retirement, even if you don't die.
Small business needs: Small business owners needlife insurance to protect their business interest. As abusiness owner, you need to consider what happensto your business should you die unexpectedly. Lifeinsurance can provide cash needed to buy adeceased partner's or shareholder's interest from hisor her estate. Life insurance can also be used tocompensate for the unexpected death of a keyemployee.
Review your coverageOnce you purchase a life insurance policy, make sureto periodically review your coverage--over time yourneeds will change. An insurance agent or financialprofessional can help you with your review.
A note about variable lifeand variable universal lifeinsurance
Variable life and variableuniversal life insurancepolicies are offered byprospectus, which you canobtain from your financialprofessional or theinsurance company. Theprospectus containsdetailed information aboutinvestment objectives, risks,charges, and expenses.You should read theprospectus and considerthis information carefullybefore purchasing avariable life or variableuniversal life insurancepolicy.
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