Philadelphia, PA. – Life insurance helps parents do what they do best – take care of their children – even after they’re gone. For many, however, life insurance tops the list of financial regrets.
Most people don’t like to think about their mortality, but avoiding it could result in financial hardship for loved ones. Such was the case for Rory Sullivan, a financial professional with MassMutual Greater Philadelphia.
“The summer before I started attending Penn State, my father died after a brief and devastating battle with cancer,” explained Sullivan. “His biggest regret was leaving me and my family with no means of support. It still crushes me to think he died without peace of mind knowing his dreams for me could, and would, come true.”
Sullivan’s father’s story of life insurance regret is all too-common. A recent study shows that one of three households would have immediate trouble paying living expenses if the primary wage earner died.1 The study also found that 40% haven’t bought life insurance or more of it because they’re unsure of how much or what type to buy.
In honor of his father, Sullivan intends to reverse these trends by urging families to put to rest uncertainties about loved one’s future well-being by assessing and addressing their life insurance needs.
Since September is Life Insurance Awareness Month, Sullivan urges community members to review their financial situation to determine if life insurance is needed, and the best policy type to choose. He offers these five questions as a starting point:
- Do I need life insurance? If others are dependent on you; the answer is most likely “yes.” Life insurance can help provide security against the loss of income for those who depend on you financially. For example, if you die, life insurance can help pay for the cost of your mortgage, your child’s college education or your spouse’s retirement. Certain life events – like marriage, children, and home ownership –impact on life insurance needs. Besides pure protection, some policies contain a cash value component accessible through loans or withdrawals2. Policy owners use the cash value for a variety of purposes, like supplementing retirement income, paying education costs or seeding a small business.
- How much should I get? Think about the expenses you do not want your loved ones to have to shoulder. Most people envision their proceeds covering immediate expenses, like funeral expenses, uncovered medical bills, taxes and outstanding debts. Thinking beyond immediate expenses, life insurance proceeds can cover everyday living costs, and future expenses like education or retirement. Visit https://www.massmutual.com/planning/calculators/life-insurance-calculator to use an online calculator to help determine your potential life insurance needs.
- What kind should I buy? There are two basic types of life insurance: term life and permanent life.
Term life provides a death benefit only if you die during a specified time period (e.g., 30 years). If you survive beyond the end of the term, you will no longer have coverage.
Permanent life provides coverage for the duration of your life provided you adhere to the premium schedule. Permanent life policies offer benefits in the form of the policy’s cash value, which can be accessed through withdrawals and loans during your lifetime. However, borrowing too much cash value from the policy may cause the policy to terminate. There are three basic types of permanent life insurance policies: whole life, universal life and variable life.
The best choice for you depends on your unique situation and financial goals.
- How do I purchase life insurance? All life insurance is not created equal. There are several product types, features, and carrier differences. It is helpful to consult with a financial professional who can match your needs and goals with the right insurance. To find an agent, ask for referrals from friends or family members, or visit the Web site for the Life and Health Insurance Foundation for Education.
Regardless of who you choose, consider buying life insurance from a company with strong financial strength ratings, as that is an indicator of your insurance company’s ability to pay its claims in full.
- Can’t it wait until after I take care of other financial priorities? You should never feel pressured to purchase life insurance; the decision needs to be the right one for you and your family. Keep in mind, however, that premiums are based both your age and your current medical condition. Life insurance premiums generally rise as you get older. If you have a medical condition that worsens over time, your premiums may increase or coverage could be declined3.
For more information on how to purchase life insurance, Contact Us today.
About MassMutual Greater Philadelphia
MassMutual Greater Philadelphia is home to expert financial coaches that provide thoughtful, thorough strategies and products that help their clients work towards goals in order to live their best lives. MassMutual Greater Philadelphia believes financial planning and management is becoming increasingly complex, and playing the game to win requires a team of people who love it and live it every day. The agency has maintained a track record of accomplishments and success for over 130 years.
For more information, visit www.GreaterPhiladelphia.MassMutual.com or follow MassMutual Greater Philadelphia on Facebook, Twitter and LinkedIn.
Securities, investment advisory and financial planning services offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC. 2 Bala Plaza, Suite 901, Bala Cynwyd, PA 19004, Tel: 610‐660‐9922.
MassMutual is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliated companies and sales representatives. Local sales agencies are not subsidiaries of MassMutual or its affiliated companies. Agency officers are not officers of MassMutual.
1 2016 Insurance Barometer Study, Life Happens and LIMRA.
2 Policy withdrawals are not subject to taxation up to the amount paid into your policy (your cost basis). If the policy is a Modified Endowment Contract, policy loans and/or withdrawals will be taxable to the extent of gain and are subject to a 10% tax penalty. Policy loans and/or withdrawals also reduce the cash surrender value and policy death benefit).
3The decision to purchase life insurance should be based on long-term financial goals and the need for a death benefit. Life insurance is not an appropriate vehicle for short-term savings or short-term investment strategies. Generally, surrender charges apply for up to twenty years of the policy. Those charges may decrease the value of the policy substantially depending on how early the policy, or any portion of it, is surrendered or accessed. While the policy allows for access to the cash value in the short-term, through loans and withdrawals, there are costs and risks associated with those transactions. You should know that there may be little to no cash value available for loans and withdrawals in the policy’s early years. Additionally, unless required by law, you generally cannot reinstate a variable life insurance policy once it’s surrendered.