MPB Financial Difference: Life Insurance
You may have heard the proverb, “in this world, nothing is certain except death and taxes.” At MPB Financial, we cannot help you with your taxes, but we can help you with your life insurance. And, regardless of your current stage in life, right now is the best time to ensure you have the proper coverage in place. When evaluating your life insurance needs it’s important to work with a professional who can help you identify your goals and recommend a policy to achieve them.
Here at MPB Financial we have access to over 25 life insurance companies offering a myriad of options for our clients. Our experts can guide you through all of them to help you make the most informed decision. Let’s take a closer look.
Why should you buy life insurance?
You may be wondering why life insurance is so important. Life insurance provides the following financial protections:
- Replacement income for people who depend on you financially, such as a spouse, children, aging parents, or even a co-signer on a student loan,
- Payment of expenses for care needed after the death of a caregiver, continuing education for dependents, or outstanding debts, and
- Funeral, end-of-life, and medical expenses.
As you consider purchasing a life insurance policy, it’s important to identify your needs so you can find the right policy to protect you and your loved ones.
What type of life insurance policy should you buy?
Based on your unique profile, we can help you determine the policy type (usually term or whole), duration (how long the policy is in force), and face amount (amount paid to your beneficiary).
Term life insurance is a policy that covers you for a fixed time period, typically ranging from 10 to 30 years. This policy will pay out if you die during the fixed period. However, if you outlive the time period, your beneficiaries will not receive any of the funds from the policy. When establishing the term period, you should try to match the length of the policy to the duration of the financial obligation that requires you to have coverage, such as the birth of a child or another major life event. Some benefits of a term life insurance policy include:
- Lower premiums to help with affordability,
- Coverage for a specific time period, and
- Flexibility, perfect for trying to determine which type of policy is best for you.
Whole life insurance is the permanent coverage option as it is designed to last throughout your lifetime. This option will pay out to your beneficiaries when you die regardless of how long you have had the policy coverage. Whole life insurance policies may also offer a cash value component, which is when a portion of your premiums are paid into a fund that will grow over time. This may allow you to borrow funds from the policy. Some benefits of a whole life insurance policy include:
- Fixed premium rates (with some policies) for the entire duration of your policy,
- Cash value growth,
- Financial protection for beneficiaries, and
- Guaranteed coverage for you and your loved ones throughout your lifetime.
How are the premium and face value determined?
Your premium rate, regardless of the type of policy you choose, is determined through a variety of factors. Of course, the initial premium rate varies based on the type and duration of the policy you choose, but the rest depends on factors about your everyday life and background. Some factors that can alter the price of your premium include:
- Age,
- Gender (women tend to get cheaper rates due to their longer life expectancy!),
- City of residence,
- Lifestyle habits such as smoking and drinking,
- Marital status, and
- Medical history.
The face value of your life insurance policy is the amount of money that the insurance company agrees to pay when you die, which is selected at the time of purchase. This is the amount of money that your beneficiaries will receive when the policy is triggered. It is important to consider all your current and future expenses when deciding on the face value amount. These current and future expenses include, but are not limited to:
- Mortgage or rent payments,
- Credit cards, bills, loans, or other financial obligations,
- Groceries and other weekly expenses,
- Childcare and education, such as tuition payments, and
- Medical, dental, and vision expenses.
Another way to determine the appropriate face value is to take your current salary and multiply it by either 10 or 15 in order to produce an amount that works for you. The higher your face value amount, the higher your premium payments will be, so be sure to consider all your options before deciding which policy and face value amount is best for you.
When should I buy life insurance?
You may be wondering when the best time to purchase a life insurance policy is. Our answer? The sooner the better. Most people do not consider it until later in life, but the best time to buy it is early on – even in your 20s. Life can change overnight, so it is better to be protected as early as possible. If you have any outstanding debt that your policy could help pay off, are a newlywed or a new parent, or if you want the funds to cover funeral and other end-of-life expenses, you should consider purchasing life insurance. Do your research and talk to one of our professionals to find out which policies work best for you.
Contact us at info@mpbfinancial.com, (717) 257-9018, or fill out this form to learn more about your life insurance options.
Sources:
5 Reasons Why Life Insurance Is Important (westernsouthern.com)
Life Insurance 101: All the Basics You Need to Know About (healthmarkets.com)
Term vs. Whole Life Insurance: Differences, Pros & Cons – NerdWallet