Give Your Loved Ones the Gift of Security

You’ve seen it happen to friends. A loved one dies unexpectedly, and they’re left not only reeling from the pain of losing someone close, but also from the burden of unexpected, expensive costs such as funeral expenses, medical bills, lawyers’ fees, taxes and debt. It’s difficult to imagine yourself in that situation — there being a day when you won’t be around to provide for your family.

Do you have life insurance? Do you have the right kind of life insurance? Do you have enough life insurance?

It’s important that you ask yourself these questions to make sure your family members and their future are protected against your untimely passing. Most Americans need life insurance but don’t know how to proceed with securing the right policy to fit the needs of their family.

There are two types of life insurance policies: term policies or pure insurance coverage, also known as whole-life policies. With term life insurance, you set your policy for a specific period of time and pay a fixed monthly rate for coverage. When that period of time expires, the previous premium rate is no longer guaranteed, but you have the option to 
(a) forego coverage or (b) obtain additional coverage with different payments or conditions. Should you pass away during the time your policy is in effect, your death benefit would be paid to your beneficiary. Term insurance is a great policy option for those looking for an inexpensive way to purchase a policy for a specific coverage amount over a specific time period. Another benefit is that, should your policy run its course and you decide to enter into a new policy agreement, you won’t have to re-qualify by showing evidence of good health.

The other type of coverage is whole life, which combines life coverage with an investment fund. With this type of policy, your policy remains in effect throughout your whole life, provided premiums are paid as required by your specific policy plan. There are various plans available, including single premium, premiums payable up to 100 years old or anywhere in between the two. The premiums that you establish at the onset of your policy will remain level throughout the payment plan and do not increase as you age. Additionally, whole-life policies also provide for the accumulation of cash value on a tax-deferred basis, and you may borrow against the policy at a reasonable interest rate. When you die, any outstanding policy loans and interest fees will be deducted from your insurance proceeds, reducing the death benefit and cash value of your policy.

How can you determine how much coverage is enough? The first step is figuring out how long you want to be insured. It’s a good rule of thumb to consider having enough insurance to replace five to seven years of your salary. However, if you have young children or significant debt, you should bump that up to 10 years’ worth of your salary.

No matter what policy or how much coverage you chose, you want to make sure that your dependents are taken care of in your absence.

Nick Grant is the Chief Executive Officer of SWBC Insurance Services. He can be reached at (210) 525-1242 or

MD News December 2011, San Antonio



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