Brian Gruss Licensed Insurance Planner

Soon-To-Be Parents Need to Review Their Life Insurance Coverage

When you’re expecting to add a child to your family, you need to make important decisions about how to best protect that child’s well-being. One of those decisions involves the adequacy of your current life insurance coverage.

Soon-to-be parents should evaluate their existing life insurance policies to determine if these policies will meet the needs of their growing family. Three core areas of life insurance merit examination:

• Type of insurance-If you currently have term life insurance policies, you may want to evaluate if they still offer enough coverage. These policies provide life insurance protection for a specific period of time, but without an accumulating cash value. Permanent life insurance policies can provide protection for an individual’s entire life so long as the premiums are paid, and they accumulate cash value over time. With the addition of a child, cash value, which can be borrowed against to pay for expenses like college tuition, may be a valuable asset. Also keep in mind that your age, health status and the type of coverage influence what life insurance will be available to you, along with its cost. Therefore, it’s a good idea to buy life insurance while you are young and healthy so as to get the best coverage at the best rate.

• Amount of coverage-The birth or adoption of child brings to the forefront the issue of what would happen in the event a wage earner dies. Each parent should have enough life insurance to ensure that the family would be able to carry on financially in the event that something happened to the other parent. Many people mistakenly believe that a stay-at-home spouse doesn’t need to be insured. However, if that person were to die, all of the tasks he or she performs, such as childcare, would still have to be done. Life insurance enables the surviving spouse to continue to work to support the family, by hiring someone to perform these tasks.

• Beneficiary-New parents should update their beneficiary designations after the birth or adoption of a child. Choose both a primary and a contingent beneficiary. This way, you will ensure that, in the event of your death, funds will be available immediately to care for your child. Without designated beneficiaries, the funds will become part of your estate.

Expectant parents should talk to Brian Gruss about their life insurance needs before their child arrives. Knowing that your family will be financially protected even if you aren’t around is one more way you can be sure that you have protected your child’s future welfare.

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A Second Glance At Whole Life

By now, most consumers understand the critical importance of life insurance—especially those who have loved ones depending on their income. Life insurance offers financial protection for your dependents should anything happen to you. Without the right coverage, your family may struggle to pay the bills and make ends meet.

However, there is a common misconception about life insurance: most people assume that term life insurance is much more affordable than whole life insurance. While this may be the case for those who are young and healthy, term insurance can become exorbitantly expensive for older individuals who may no longer be the picture of health.

Term vs. Whole

As you probably know, term life insurance covers you for a specific amount of time—anywhere from one to 30 years. These policies are less expensive because they are designed solely for protection. Many people choose term insurance because they figure the need for life insurance will decrease as they get older. Term insurance is also a useful option for those who want to protect their children until they are able to support themselves.

On the other hand, whole life insurance is permanent—it offers protection for your entire life. This insurance is ideal for individuals who still have someone depending on their income, whether it’s a spouse, grandchild or a special needs son or daughter. It’s also a good option for individuals who want to ensure there’s enough money to pay off their debts or provide a tax-advantaged inheritance for their heirs after they die.

Making the switch

Let’s say you fall into that second category—you think you may have a need for life insurance protection for the rest of your life. However, your term policy is about to expire. What should you do?

You may consider renewing your current term policy. However, your premiums will most likely skyrocket now that you’re older. Alternatively, you could convert your term policy to whole life. This will ensure that you are covered for the rest of your lifetime—which means your dependents will be protected when you die, whether that happens one or 20 years from now.

Whole-some benefits

One advantage to whole life insurance is that the premiums generally remain constant over one’s lifetime.

Another benefit to whole life is that you can borrow from the accumulated cash value of your policy. However, it’s important to realize that like any loan, interest will accrue on the money you borrow from your policy. If you do not pay back the loan during your lifetime, this amount will be deducted from the death benefit before it’s paid out to your heirs.

The loan feature is particularly beneficial to older policyholders who have built up a significant cash value. After all, as we grow older, we often run into some financial “surprises”—from medical emergencies to dwindling retirement income. The cash value from a whole life policy could help you deal with these unexpected events. For example, you could borrow from your whole life policy’s cash value to supplement your income, pay off your mortgage or fund long-term care expenses. You could even use the money to help pay for a grandchild’s college education.

Are you a good candidate?

As with any type of insurance, whether or not you qualify for whole life and the price you’ll pay depends on your age, health and the specific type and amount of insurance you plan to purchase. Meet with Brian Gruss to determine whether or not whole life insurance is right for you. He can assess your unique situation and find the best policy to meet your needs.

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Security No Matter What Life Throws Your Way

We live in an age of insecurity. No one wants to lose what they have worked so hard for. It’s important to include life insurance among your financial options. Life insurance may be an old-fashioned way to protect yourself and your family, but it is still one of the best products you can buy.

No other financial instrument will do what life insurance can do. The moment your life insurance policy goes into force, the full death benefit to your beneficiary is guaranteed, from day 1 and for as long as you continue to keep the policy in force by paying the premiums. Financial planners call this aspect of life insurance “creating an immediate estate.”

Life insurance can seem complicated. There are more products than just term and permanent life insurance. Term and permanent life insurance have many riders and variations that can be added to suit your family’s needs.

This is to your advantage. It means greater flexibility and many options. Therefore, a life insurance protection plan can be designed to fit the individual needs of your family.

Various types of policies can serve to protect the family’s economic future. Insurers have adapted their products to augment savings and investment programs.

It’s important to protect your lifestyle and well-being too. Disability income protection coverage can replace earned income (up to the amount purchased) in the event of serious illness or injury that prevents you from working.

A trained life insurance agent can help you choose from among all the specialized products. Be sure your agent represents a financially strong company. One way to check on a company is through the ratings of such independent evaluators as Moody’s Investors Services, Standard & Poor’s, A. M. Best, and Duff & Phelps.

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