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LIFE & DISABILITY INSURANCE -
Types Of Life Insurance (continued)
c. Variable Universal Life Insurance. Variable universal life insurance is universal
life insurance that allows you more control in how the cash value of your policy
is invested. It permits you to invest the cash value of your life insurance policy
in various funding options, that in turn invest in such things as stocks and bonds.
You decide how your net policy values are to be invested, and you bear the investment
risk. If market performance is poor, your death benefit may decrease, and you may
have to pay higher premiums to keep the policy in effect. But your cash value also
has the potential to grow more rapidly than with other cash-
The primary function of disability insurance is to replace lost income when someone becomes either partially or totally disabled and cannot work. Disability policies generally only provide coverage until you reach Social Security retirement age (65 or older). Purchasing disability coverage is often ignored, but in many ways it is more important than life insurance coverage. If you are disabled and cannot work, your family has not only lost your income, but they also have the expense of providing for your needs, which may include your spouse staying at home, resulting in the loss of their income also. In addition, unlike when you die at a younger age, if you are disabled, your spouse will not have the opportunity to remarry and secure additional means of support. So, consider your need for disability insurance carefully. The types of policies available include:
1. Short-
2. Long-
3. Group long-
4. Social Security disability payments may be available for those that become totally disabled and are unable to perform any work. They generally start after twelve months of disability, and qualification for the disability payments can often be difficult to accomplish. Social Security disability payments are based on a schedule, and are not a percentage of your lost income, as are most disability insurance policies. This coverage is automatic and does not need to be purchased. You will either qualify upon disability or not qualify, depending on the facts surrounding your case.
Factors To Consider When Buying Life & Disability Coverage
Many factors need to be considered when buying life insurance and disability coverage. Some of these factors deal with cost of the insurance, and others deal with the nature of the coverage being purchased. The relative importance of each of these factors to a particular individual varies. Make sure to discuss your needs with your insurance agent and/or financial advisor.
1. Factors to consider when purchasing life insurance.
a. The amount of coverage required. Coverage amounts are available as low as $1,000 to several million dollars. Deciding on the “right” amount of coverage depends on the cost of coverage, your personal needs and situation, and just why you need life insurance. Consider the amount of annual income that would be lost, your current debts and the length of time for which you need to provide financial security. Your stage of life is important. If you are relatively young, your family will probably move on with a new life at some time after your passing, and will make their own way. If you are later in life, you may need to provide for your spouse’s well being for an extended period if you pass away. In any case, do not become “insurance poor” by buying excessive coverage. While large amounts of coverage are a great “investment” if you die young (benefits are paid and premiums stop), for a person with an average life span, insurance is costly. Remember, assuming you are healthy, you can always buy additional coverage at a later date if you feel more coverage is required.
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