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Risk Management - Life Insurance

 

How much life insurance do you need?

Your life insurance needs will depend on a number of factors, including the size of your family, the nature of your financial obligations, your career stage and your goals. For example, when you're young, you may not have a great need for life insurance. However, as you take on more responsibilities and your family grows, your need for life insurance increases.

Here are some questions that can help you start thinking about the amount of life insurance you need:

  • What immediate financial expenses (e.g., debt repayment, funeral expenses) will your family face upon your death?
  • How much of your salary is devoted to current expenses and future needs?
  • How long will your dependents need support if you were to die tomorrow?
  • How much money will you want to leave for special situations upon your death, such as funding your children's education, gifts to charities, or an inheritance for your children?
  • What other assets or insurance policies do you have?

Life insurance and annuities are unique assets. Because of their tax-favored benefits, they can be used to solve some of life's most perplexing problems. Retirement planning, estate planning, college education and family protection are just a few of the financial objectives that may be met with insurance and annuity products.

As insurance licensed agents, we have access to a wide array of insurance and annuity products. Recommendations are based on your specific financial objectives, and then matched to the product(s) that meet those needs.

Before deciding whether to buy term or permanent life insurance, consider policy cost and potential savings that may be available. Also keep in mind that your insurance needs will likely change as your family, job, health and financial picture changes. Therefore, you will want to build some flexibility into the decision-making process. Following are some common reasons for buying life insurance and which type of insurance may best fit the need.

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Get to Know Life Insurance

Essentially, life insurance provides a death benefit when the insured individual becomes deceased; however, life insurance can be so much more. It is unique in that it can be used as an investment tool to leverage your finances.

Advantages of life insurance include:

  1. Policy cash values will accumulate on a tax-deferred basis
  2. Policy death benefits are received income tax-free
  3. Policy cash values may be accessed on a tax-advantaged basis
 
Comparison of Types of Cash Value Life Insurance
  Whole
Life
Universal Life Variable Universal
Earnings grow tax deferred Yes Yes Yes
Cash value may be withdrawn tax free* Within limits Within limits Within limits
Policy loan proceeds received tax free*
(Note: Special tax rules apply if policy is later cancelled)
Yes Yes Yes
Policy owner controls choice of investments No No Yes
Policy owner can change premium payment amount No Yes Yes
Policy owner can control premium payment timing No Yes Yes
Cash value growth guaranteed by insurance company** Yes Yes No
Partial withdrawals of cash value allowed* Yes Yes Yes
Policy loans allowed* Yes Yes Yes
Cash values may be used to pay monthly deductions* No Yes Yes
 
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ABOUT RAYMOND JAMES

Raymond James financial advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered. Therefore, a response to a request for information may be delayed. Please note that not all of the investments and services mentioned are available in every state. Investors outside of the United States are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this site. Contact your local Raymond James office for information and availability.

Marcum Financial Services, An Independent Practice

Marcum Financial Services is not a registered broker/dealer and is independent of Raymond James Financial Services, Inc. Member FINRA / SIPC. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc. and Marcum Financial Services, LLC.

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