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Life Insurance

At Reassured, we want to make sure you have all the information you need to confidently make the best decisions for your family. Whether you’re deciding between life insurance options, looking for mortgage protection, or considering retirement coverage, we are here to help you decide which insurance plan best fits your needs, and is well within your budget.

“Why People Love Reassured” 

Mortgage Protection Insurance

Mortgage protection insurance is a type of term life insurance that is designed to pay off your mortgage in the event of your death. It functions like a standard term life policy: You purchase a policy for a set period, make monthly payments, and if you pass away while the policy is in force, your chosen beneficiary receives funds to pay off your mortgage. This coverage ensures that your family could stay in their home if you were no longer able to contribute to mortgage payments.

Mortgage protection insurance is right for you if you want to:

  • Protect your most valuable asset
  • Ensure your loved ones never have to deal with the fear of losing their home
  • Provide financial security if the unthinkable happens

 

Term Life Insurance

When you know you want to provide life insurance benefits to your loved ones in the event you die prematurely, it’s easy to find yourself confused by all of the different types of policies, and policy options, available. Term life insurance can be an affordable way to provide some financial protection for a specific period of time.

What Is Term Life Insurance?

Term life insurance coverage is just what it sounds like: life insurance for a specified policy term. The coverage is in effect for a term of years that you choose up front, usually ranging from 10-30 years. If you die while the policy is in force, the insurance company pays death benefits to your named beneficiaries.

At a high level, there are two main types of life insurance to choose from:

  • Term, which is straight-up, pure life insurance that lasts for a fixed period of time.
  • Permanent (most of which are also known as “cash-value”), which are life insurance policies with investment components attached to them, that can last for the whole life of the insured. Under this umbrella, there is a flurry of policy types to choose from, including whole, variable, and universal life.

Term life and whole life are by far the most common types, so we’ll cover them below.

Life Insurance Basics

“Term life” is life insurance in its simplest and purest form, which also makes it a lot more affordable. It has one job: to help you and your family reach your goal — whether that’s paying off the mortgage, supporting kids while they’re young, or building savings — even if you die.

You can think of it as a financial safety net, stretched over a given amount of time, or “term”, of your choosing — often between 10 and 30 years. You make the same payment every month, and if you die within that term, your beneficiaries will be able to file a claim to receive the predetermined payout.

At the end of your term, your coverage will end, and so will your payments. The hope is that you never needed that safety net and your coverage did its job actively protecting you and your family.

“Life insurance should be simple. That’s why we recommend only purchasing a term life insurance policy. It’s straightforward, inexpensive, and designed to do one thing over the long-term: support your loved ones if you die.”
Dave Ramsey

MONEY-MANAGEMENT EXPERT

What is term life insurance?

“Term life” is life insurance in its simplest and purest form, which also makes it a lot more affordable. It has one job: to help you and your family reach your goal — whether that’s paying off the mortgage, supporting kids while they’re young, or building savings — even if you die.

You can think of it as a financial safety net, stretched over a given amount of time, or “term”, of your choosing — often between 10 and 30 years. You make the same payment every month, and if you die within that term, your beneficiaries will be able to file a claim to receive the predetermined payout.

At the end of your term, your coverage will end, and so will your payments. The hope is that you never needed that safety net and your coverage did its job actively protecting you and your family.

What is whole life insurance?
“Whole life” insurance is the most popular type of “Permanent” or “Cash-value” life insurance. It differs from Term Life in 2 major ways:

  1. You don’t pick a term for your policy — it lasts your whole life (as the name implies). That means that as long as you can keep up with premiums (including into retirement), your people should receive a payout when you die.
  2. It includes a separate investment component that a customer can borrow against or cash out, with important caveats.

These two differences lead to much higher premiums — Whole Life is easily 10 times more expensive than Term.¹ That’s because, from the insurance company’s perspective, the premiums need to cover a higher probability that the policy will pay out, as well as have money left over to invest².

How does whole life insurance work?

Whole Life insurance usually has two components, the “death benefit” and the “cash value,” all bundled into one, in exchange for premiums.

The death benefit corresponds to the life insurance part of the policy. As long as you keep paying your premiums, your beneficiaries will receive the death benefit (a predetermined sum of money) when you die.

The cash value corresponds to the investment part of the policy. When you pay premiums, a percentage goes into savings, which earns interest and grows, tax-deferred, over time.

It can get pretty complex, so keep in mind the following when shopping for whole life insurance:

When you die, your beneficiaries will usually not receive the cash value component — only the death benefit. Anything that remains of your policy’s cash value will most likely be retained by the insurance company.

You aren’t likely to see large investment returns compared to other investments, like what you might expect from a typical 401(k) or individual retirement account. Consider buying a term life policy and investing your extra money elsewhere.

There are 3 ways to access your cash value:

 

  • You can surrender your policy and collect your cash value — usually for a fee or penalty. In this case, keep in mind that you will also lose the death benefit. Also, if you surrender your policy too soon (often that means within the first ten years) you’re unlikely to get back more than the premiums you paid, if anything.
  • You can withdraw money tax free. Be careful that this doesn’t affect the payout to your beneficiaries though, since, after all, that’s why you got life insurance in the first place. Also note that if you surrender your policy or lose it because you can’t keep up with premiums, any money that was withdrawn over your premium basis (the money originally paid) will be taxed as income.
  • You can borrow against your policy to take out a loan (which you’ll pay interest on). If you die before paying back your loan, the amount and interest you still owe will be deducted from the death benefit.