Different types of life insurance you need to know!
Dec 02 2016

Different types of life insurance you need to know!

Different types of life insurance you need to know!

People buy life insurance to protect those they love to be sure that their kids are able to attend college, or that their families can remain in their home and neighborhood in the event of their untimely passing. Life Insurance can have many uses; you can even use life insurance to be sure that your beloved pets will be well taken care of if your pets outlive you.

You can buy a life insurance policy specifically for the future care of your pet in the event of your death that would be payable to your pet’s future owner and care giver. Or better yet, by creating a Pet Trust, the life insurance policy would pay a death benefit to the Pet Trust, which in turn provides instructions along with the money to carry out your wishes. You can set this up with a number of contingencies so that your plan is complete with multiple back up plans.

What if my pet dies before I do? If you get another pet to welcome to your family you would want to review your pet trust and life insurance to be sure it was all up to date and accurate and make any changes that maybe needed. Or you could leave a lasting legacy by directing this money to your favorite charity, animal rescue origination or person of your choice, it’s completely up to you and very simple.

The process would start with some basic health information to determine your insurability, such as your health history.

A Pet Planning Needs Analysis would be next; this would calculate how much life insurance would be needed to assure your pets were taken care of according to your wishes. This would take into account how much money would be needed at your death or illness and how much would be needed over the pet’s lifetime, usually in a monthly payment to the new owner based on the cost of your pet’s future care.

Along with your Pet Planning Needs Analysis you would need to document your wishes and arrangements for your pets in the event of your untimely passing. This should be in writing and agreed upon by all parties. The best way to do this would be through a Pet Trust. You would either go to a qualified estate planning attorney or get a PetWill Pet Trust document from MyPetWill.com for only a one-time fee of $15.95

Now let’s take a look at the different types of life insurance policies:

Term Life Insurance provides coverage for a fixed period of 10, 15, 20 or 30 Years. Not all term is the same, some term polices are convertible, which means that under the policies guidelines it could be converted into permanent life insurance, without having to go through underwriting again, this is an important feature. You could still be alive when your term period comes to an end but no longer be insurable due an Illness or accident and still have a need for life insurance coverage.

There is also return of premium term, which does what is says, you can get all your premium back at the end of the term if you do not die, this costs more per month – but you are rewarded for living at the end of the term period.

The best option for many people is Permanente Life Insurance, that comes in several varieties. Whole Life Insurance as the name implies gives you coverage for your whole life, it can build up cash value similar to savings account inside the policy. Guaranteed Universal Life– the payments will stay the same, this policy does not build cash value but is usually less expensive than Whole Life. There are also Universal Life Policies that build cash value as well. Indexed Universal Life, is fairly new and becoming very popular, it can also build cash value, with the potential for higher interest crediting based on stock market performance. What’s the deal about cash value? You can borrow the money from your policy and use it like a safety net for the future or if you started this policy early enough in your life you could also use it for retirement income, plus still have a death benefit for your pet.

No one knows how long they will live so that’s why if you can afford it, you should buy insurance that will be there when you die, in other words, some form of permanent life insurance. Life insurance can be affordable; it provides a benefit that only costs pennies on the dollar as a return on your investment. And the death benefit proceeds are normally tax free to the beneficiary.

Your pets can not speak for themselves, so if you are no longer there to speak for them, a great way to ensure that they will be well cared for according to your wishes is to create a Pet Trust and fund it with Life Insurance.