Income protection FAQs

Who needs Life Insurance?

Your need for life insurance varies with your age and responsibilities. It is a very important part of financial planning. There are several reasons to purchase life insurance. You may need to replace income that would be lost with the death of a wage earner. You may want to make sure your dependents do not incur significant debt when you die. Life insurance may allow them to keep assets versus selling them to pay outstanding bills or taxes.

Consumers should consider the following factors when purchasing life insurance:

• Medical expenses previous to death, burial costs and estate taxes
• Support while remaining family members try to secure employment
• Continued monthly bills and expenses, day-care costs, college tuition and retirement. Mortgage protection is especially important.

Term or Permanent?
What is the Right Kind of Life Insurance?

All policies are not the same. Some give coverage for your lifetime and other cover you for a specific number of years. Some build up cash values and others do not. Some policies combine different kinds of insurance, and others let you change from one kind of insurance to another. Some policies may offer other benefits while you are still living. There are two basic types of life insurance: term insurance and permanent insurance.

• Term: The least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis over a specific period of time.
• Permanent: An umbrella term for life insurance plans that do not expire and combine a death benefit with a savings portion.
•  Generally speaking,  term offers the greatest coverage for the lowest initial premium and is a great solution for people with temporary needs or a limited budget. Permanent insurance may make more sense if you anticipate a need for lifelong protection, or if the option of accumulating tax-deferred cash values is attractive to you. Also, it doesn’t have to be one or the other. Often, a combination of term and permanent insurance is the right answer.

How Much Life Insurance Do I Need?

A thorough conversation about your individual needs helps arrive at how much insurance is appropriate. 

• How much of the family income do I provide?
• If I were to die, how would my survivors, especially my children, get by?
• Does anyone else depend on me financially, such as a parent, grandparent, brother or sister?
• Do I have children for whom I would like to set aside money to finish their education in the event of my death?
• How will my family pay final expenses and repay debts after my death?
• Do I have family members or organizations to whom I would like to leave money?
• Will there be estate taxes to pay after my death?

What is an Annuity?

An annuity is an insurance contract intended to provide a guaranteed income, usually after retirement, that one cannot outlive. People most often use annuities to save money for their retirement. Many use it to create an extra retirement income. Along with Social Security, pensions and military retired pay, annuities make sure you will have enough guaranteed income to pay your bills without touching long term savings and investments.

What does an Annuity do?

While life insurance provides financial protection against dying too soon, annuities provide financial protection against living too long. They do this by guaranteeing a stream of income for life. Some annuities also use the power of tax deferral — earnings aren't taxed until they're withdrawn — so your money can grow faster.