Once you have reached a certain level of understanding of “matters financial,” you are likely to recognize the value of life insurance in your overall financial plan. You probably also realize that one of the reasons life insurance is such a valuable planning tool is its versatility.
For instance, life insurance can provide economic protection for your family members or other beneficiaries. It can also protect your business. And life insurance can provide for your retirement and for the liquidity of your estate. Moreover, life insurance can secure all of these – as well as other – advantages in an especially flexible manner. Life insurance can be purchased in many different forms and in varying amounts of coverage. It can accumulate cash values, pay dividends, and offer loan privileges.
In addition to these advantages, a number of “extra features” may be added to a basic life insurance policy. Those features can enhance the policy and make it even more desirable for the policyholder and beneficiaries. Some of these potential “extras”:
Accidental Death Benefit – If this provision is included in a policy, the face amount to be paid will increase if the insured should die in an accident. (Certain causes of death are normally excluded, including acts of war, suicide, military service, and some types of flying accidents.) Premiums for this benefit are usually quite low.
Guaranteed Insurability Rider – With this type of rider on a policy, the insured is able to reserve the right to buy a specific amount of insurance coverage on certain future dates at standard rates, without a medical exam. A typical arrangement might provide for the purchase of up to $20,000 of coverage at various ages (for example, 35, 45, etc.) or on the occurrence of certain events (the birth of a child, for instance). This type of rider can be extremely valuable for a younger insured who will probably need more insurance coverage in the future as earnings increase and family responsibilities change.
Waiver of Premium Rider – A rider of this variety means that an insured who becomes totally and permanently disabled while covered under the policy will not lose his or her coverage – because no further premium payments will be required. That is, future premiums will be waived upon disability. In addition, if the insured’s policy is a cash-value policy, that policy will continue to grow in value despite the fact that no premiums are being paid. The cost of this type of rider will depend on the age of the insured and the type of policy.
Family Member Insurance – The “family member” rider will provide life insurance for a spouse and/or the insured’s children under the insured’s basic policy. In most cases, the family coverage will be in the form of term insurance. The amount of insurance and the cost of this type of rider will depend on the variety of basic coverage chosen and the ages of the insured and his or her spouse.
The “extra” coverages outlined here are only a sample of the many features that are commonly added to life insurance policies today. They serve to demonstrate the possibilities for coverage that are available as part of a well-thought-out life insurance program. In a world of complicated planning arrangements, certain fundamental approaches may be overlooked . . . and that could be a mistake.
Submitted by: (David Tucci, Mutual of Omaha)
(773-316-6582 www.davidtucci.com )