In good times and in bad, you have always put your family first. But what happens when you’re gone? Although choosing life insurance can be a daunting task, selecting the right policy is critical to your family’s financial well-being.
Having insufficient coverage, or worse, having no coverage at all, may be detrimental to your loved ones during a time when they need support the most.
Raymond James understands the importance of your family. And because you are our first priority, we want to help ensure the financial well-being of those you love most. In fact, we were one of the first firms to understand and emphasize the role insurance plays in a comprehensive financial plan.
Do I Need Life Insurance?
Are others dependent upon you for financial support? If your children, spouse or other loved ones had to continue without you, would they have ample income to do so?
An essential part of financial planning, life insurance can help replace income that would be lost upon your death. It can also help ensure that dependents are not burdened with significant debt, affording them financial security in a difficult time.
How Much Life Insurance Do I Need?
Your financial advisor can assist you in determining how much insurance you may need. Some factors for consideration include:
- Immediate expenses such as hospital bills, funeral costs and estate taxes,
- Funds for the readjustment period, enabling loved ones to move or find a job, and
- Short- and long-term financial needs such as monthly bills, college tuition or retirement.
What Type of Policy Is Best for Me and My Family?
It is usually best to begin by comparing different types of policies. Although nothing can replace the advice of a financial advisor when making the final decision, this table can be a helpful starting point.
|Term Life||Whole Life||Universal Life||Variable Life|
|Policy term||Stated in policy||Life||Life||Life|
|Type of death benefit||Face value||Face value (dividends)||Face value and/or face + cash value||Face value and/or face + cash value|
|Cash value||None||Fixed rate, guaranteed||Current rate, guaranteed minimum||Variable rate, not guaranteed|
|Regulatory agency||Insurance||Insurance||Insurance||Insurance and securities|
Term Life Insurance
If you’re looking for protection during a specific time period at a reasonable price, consider term life insurance.
- Protection is limited to a specified and finite period of time, usually between one and 20 years.
- Death benefits are paid only if death occurs during the period covered by the policy.
- Coverage ceases when premiums are not paid.
- Policy costs less than other types of insurance, but provides equal protection.
- It provides the largest immediate coverage per dollar since it lasts only for a specific period of time.
You may have two additional options available when purchasing term life insurance: renewable and convertible policies.
Renewable Term Life Insurance
Under this type of policy, the holder does not need to provide evidence of insurability to renew the policy. Premiums may increase, however, at time of renewal.
Convertible Term Life Insurance
Convertible term life policies can be exchanged for whole life, universal or variable policies. Policyholders do not need to provide evidence of insurability, but premiums will increase since you are moving from a term to a permanent policy.
Whole Life Insurance
As its name suggests, a whole life policy remains in effect your entire life. It differs from term insurance in that a portion of the premiums goes into a cash value account.
- Protection is provided for as long as you live.
- Death benefit is guaranteed.
- Cash value grows income tax deferred.
- Cash value may be borrowed from the policy.
- Premiums are designed to be level and do not increase as you get older.
- Insurance proceeds paid to the beneficiary are received income tax free.
Universal Life Insurance
This policy offers a wide range of choices regarding premium payments, allowing you to choose how much will be paid and when.
- Premiums are flexible and are subject to specified minimums and maximums.
- Death benefits, which are generally free from federal income tax, can be increased or decreased as necessary.
- Cash value of the policy accumulates, tax-deferred, at current interest rates.
- You receive cash value when redeemed, which reflects the interest earned on the account. This is only upon termination of the insurance policy.
- Portions of the cash value, up to cost basis, may be withdrawn for special needs, such as college tuition, without paying interest or surrendering the policy.
Variable Life Insurance
Designed for growth, this policy allows you to invest the cash value of the policy into various investment alternatives. This affords cash value the potential to grow at a faster rate than it would in another type of plan.
- The insurance amount is designed to be level or increases as the policy cash value increases.
- Policy cash value fluctuates according to underlying investment performance.
- Cash value and death benefit may be invested in sub-accounts containing domestic or international stocks, bonds, real estate and other, more speculative investments.
- Higher cash values and death benefits may be obtained or lost due to the financial climate and investment performance.
- Investment earnings are income tax-deferred.
For more information on selecting the right policy for you, please contact your financial advisor.
Investors should carefully consider the investment objectives, risks, charges and expenses of variable life insurance before investing. The prospectus contains this and other information about variable life insurance. The prospectus is available from your financial advisor and should be read carefully before investing.
There are fees and charges associated with variable life insurance policies. Charges vary based on the circumstances of the insured life. Surrender charges vary by issue age, risk class and gender. Loans and partial withdrawals will decrease the death benefit and cash value and may be subject to policy limitations and income tax. A 10% federal tax penalty may also apply if the loan or withdrawal is taken prior to age 59½. All guarantees, including death benefits, are subject to the claims-paying ability of the issuing insurance company. An investment in variable life insurance involves risk, including possible loss of principal. Investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than the original investment.