Karl Chew State Farm Insurance Midland MI
What is Life Insurance?
Life insurance is insurance that will protect your family and/or specified dependents in the event of the policy holder’s death. In general, it is an essential component in planning for the future.
There are many options with coverage, depending on your situation. And there are three main categories of life insurance: term life, universal life, and whole life insurance.
Term life is the simplest and least expensive type of policy. It's pure insurance with no cash value account. A term life policy has only one function: to pay a specific lump sum to whoever you've designated, upon a specific event, your death.
Whole life insurance provides permanent protection for your dependents while building a cash value account. With this type of insurance, the insurance company manages the policies various accounts.
Universal life insurance provides permanent protection for your dependents and is more flexible than whole or variable life. State Farm offers Life, Term, Group Term, Whole, Medical, Hospitalization, Disability, Short Term, Long Term, Credit Life, Medicare Suppliment, Universal Life and Whole Life Insurance.
For more information contact the office of Midland State Farm Agent Karl Chew at
989 631-6471 or visit www.karlchew.com
Do you need Life Insurance?
It depends on your situation. Several key questions follow below to help give you an idea of signals pointing to "yes".
- Are you married?
- Own a business?
- Dependent children?
- Other dependent relatives? (seniors, disabled)
- You possess a formidable estate
- Currently have major financial obligations? (mortgage, multiple loans)
A good life insurance policy would handle the financial responsibilities you left behind so family members wouldn't be burdened. Unlike the funds from an estate, the benefits from a life insurance policy will shoot straight to the beneficiaries, without any roadblocks.
For more information contact the office of Midland State Farm Insurance Agent Karl Chew at 989 631-6471 or visit www.karlchew.com.
How Much Life Insurance is Enough?
A good rule of thumb is to aim for a policy that will cover 2-6 times your annual income. If your yearly income is $50,000, then a policy from $100,000 - $300,000 should be sufficient. Again, it depends on your personal situation. Take into consideration the rate of inflation, potential college tuition costs, or large loans and home mortgages. If you have two children who plan on attending college, current tuition prices range anywhere from $10,000 - $30,000 per year, with the high end range focusing on private universities. Expect that range to increase anywhere from 5-10% within the next 5 years.
For more information contact the office of Midland State Farm Insurance Agent Karl Chew at 989 631-6471 or visit www.karlchew.com.
Which Type of Life Insurance is Best for You?
There are two basic types of life insurance: term and permanent. Term insurance is purely life insurance while permanent (aka "cash value" or "whole life") policies include a savings element.
You've probably heard lots of sales pitches and marketing hype regarding cash value polices, and other arguments about how term policies are the better deal. The truth of the matter depends on each person’s individual situation.
Benefits of a Term Life Policy
If you die during the term of your policy your beneficiaries get paid -that's all there is to it.
You aren't paying anything extra to fund a savings account or cover investment fees. And because the market is so competitive for term insurance, companies have a huge incentive to keep prices low.
With relatively little effort you can comparison shop and assure yourself of a good deal.
- You pay only for what you need when you need it.
You typically need life insurance coverage for a specific period of time (until the kids are out of college, for instance).
Benefits of a Permanent Life Insurance Policy
A permanent plan can give you access to some or all of the premiums that you have been paying for in a way favorable to your taxes.
- It's with you until you die.
This type of policy coverage is guaranteed for your life with no out of the blue payment increases. A term policy will expire at a certain date, and a renewed policy could have much higher premiums.
Maybe the best reason for a permanent policy is to make sure your estate and investments don't get eaten up by the government. A permanent policy can provide peace of mind that your family and loved ones will be taken care of for the future.
Remember, the decision to buy a permanent or a term life insurance policy will depend on your situation, your age, your financial well-being, and other factors. If you are a young family with some investments to protect but not financially stable a term life policy might be a good idea to protect those investments and your family. However, if you are financially stable with considerable investments, it may be a better decision in the long run to purchase a permanent plan
.
For more information contact the office of Midland State Farm Insurance Agent Karl Chew at 989 631-6471 or visit www.karlchew.com.
Whole Life Insurance
Whole life insurance provides permanent protection for your dependents while building a cash value account. With this type of insurance, the insurance company manages the policies various accounts.
What it does
- It pays a death benefit to the beneficiary you name and offers you a low risk cash value account and tax-deferred cash accumulation.
- It provides a fixed premium which can't increase during your lifetime as long as you continue to pay the planned amount.
- It allows the insurance company to exclusively manage the cash value account in your policy.
- It provides you the option to receive dividends from your policy or apply them to reduce payments.
- It offers you the right to withdraw from the policy during your lifetime.
What it doesn't do
- It doesn't offer the account flexibility to invest in separate accounts such as money market, stock, and bond funds.
- It doesn't allow you the account flexibility to split your money among different accounts or to move your money between accounts.
- It doesn't offer premium flexibility.
- It doesn't offer face amount flexibility.
For more information contact the office of Midland State Farm Agent Karl Chew at
989 631-6471 or visit www.karlchew.com
Universal Life Insurance
Universal life insurance provides permanent protection for your dependents and is more flexible than whole or variable life.
What it does
- It pays a death benefit to the beneficiary you name and offers you a low risk cash value account and tax deferred accumulation.
- It allows you to earn market rates of interest on your cash value account.
- It offers the right to borrow or withdraw from the policy during your lifetime.
- It allows you premium flexibility.
- It offers face amount flexibility.
What it doesn't do
- It doesn't offer you the account flexibility to invest in separate accounts such as money market, stock, and bond funds.
- It doesn't allow you the account flexibility to split your money among different accounts or to move your money between accounts.
For more information contact the office of Midland State Farm Insurance Agent Karl Chew at 989 631-6471 or visit www.karlchew.com.
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