Individual Life Insurance

The concept behind life insurance is financial and estate planning to provide for your family and loved ones after your death. Individual life insurance can be used for important situations such as replacing lost income for family and dependents who rely on it. It can also be used to establish an inheritance for heirs.  

Life insurance can be used to cover ever-increasing funeral and burial costs, as well as estate and so-called “death” taxes, and any outstanding debts you may leave behind. 

Some types of life insurance can accumulate a cash-value. 

There are effectively two basic kinds of life insurance: term life and permanent life. Permanent life can be broken down into two different types: whole and universal.

Individual term life insurance is the simplest form of insurance. Term life insurance policies are purchased for a certain period of time, typically from one year up to 30 years. If the policyholder dies during the term of the policy, the beneficiaries receive a predetermined lump sum. 

Term life insurance offers a cost-effective way to make sure your loved ones have funding for specific needs, such as college or a mortgage. Once these needs have passed, you may no longer need this type of coverage.

Whole life insurance is designed to last the entire lifetime of the insured, provided premiums are paid. A whole life policy is often used for tax and legacy planning as well as for funding trusts for special needs and dependents. In addition, whole life insurance policies also include a savings component that can accumulate cash value. 

Universal life insurance policies offer flexible premiums that may allow you to adjust how much you’ll pay each year by accessing some of the policy’s cash value. In addition, some policies may allow you to increase or decrease the death benefit to match your particular circumstances.

There’s a common misconception that more is always better when it comes to insurance. Reality is that you should evaluate your situation to make sure you get the right types and amounts of coverage. Too little coverage could leave your dependents financially burdened so work with your agent to determine how much you need. 

A few general questions can provide a useful guide to how much life insurance coverage might be right for you. 

1. First, think about how many people depend on your financial earning capacity. If you have no dependents, your needs aren’t as great as someone with one or more dependents.
2. Next, consider how much money your dependents would need for living expenses. This involves an analysis of your living situation and what it would take for your family to continue in a relatively similar lifestyle. When working through this analysis, be sure to account for other sources of income they may receive – from other insurance policies, pensions, social security, etc. 
3. Also, consider how long your dependents would take to gain self-sufficiency. If you leave behind young children, they will obviously require more time to reach a stage of individual sustainability than a child (or children) in college, for example.
4. There are also short-term considerations to evaluate. Will an immediate stop to income leave your dependents unable to cover immediate needs like groceries and bills? If the bulk of your estate is in non-liquid assets (those that cannot be quickly or easily converted to cash, such as real estate or business investments), you’ll need to make arrangements that provide short-term coverage. 
5. If you’re the owner of your own business, you also must consider the impact a sudden death would have on that business. Would it be able to continue without you? Would there be enough cash on hand to keep the business operational until someone else took control? 

It’s important questions like these where a knowledgeable and experienced agent can help guarantee the proper planning for your individual circumstances. That’s why Pharmacists Mutual offers a full range of products to meet your business and personal needs.