Brad Cunard learnt the value of life insurance the difficult way. While stuck in traffic with his wife Lisa and two boys, Max and Owen, they hit a violent thunderstorm. Nothing could have prepared Brad for what happened next.
A tree fell on their car with horrible precision, instantly killing Lisa, 38, and their boys, who were three years and five months old. Brad had always believed he and Lisa would live to enjoy Little League games, proms and grandchildren. Now he found himself alone, not sure how he’d pick up the pieces.
Luckily, Brad and his wife had purchased life insurance, which gave him the financial security to grieve. “The money won’t bring Lisa, Max or Owen back, but it makes the existence I find myself in easier. I don’t have to work while I’m not ready, or sell my house because I can’t afford the mortgage. I’ve been able to think slowly about my future,” Brad says.
The insurance money also helped keep Brad’s business running while he was home. Brad says because of financial planning, “I know I’ll do better than survive. I’ll live and succeed in the second chapter of my life and make my family proud.”
Insurance firms offer various insurance policies depending on the individual. For example, Term insurance is inexpensive, but is for a limited time and does not build cash values. Permanent life insurance, like a whole life policy, has a fixed premium at date of issue that never increases. If it’s a mutual company, they pay dividends that can be applied to reduce the premium. A valuable part of a whole life policy is the build up of guaranteed cash values that can serve as a reserve that can be used for educational, retirement or other needs.
Term, which is sometimes referred to as temporary insurance, an individual buys a policy for a specific time (1yr, 10 years or even a 30 year span) where a death benefit is paid to the beneficiary if the insured dies during that period. For a healthy almost 40-year old man, this could amount to $15 a month for this policy that would provide a $100,000 payment if the insured dies during the time period he selected.
Whole life insurance can cover an insured for his or her lifetime. The payout is assured at the end of the policy (assuming the policy is kept current) and the policy accrues cash value.” Upon death, the proceeds from the policy are paid tax-free to the beneficiary. This offers consumers guaranteed cash value accumulation. This whole life policy is considerably more expensive than term insurance, but offers a premium that never increases and the policy holder can build guaranteed cash values.
The whole life plan offers the insured $100,306 in death benefits. The permanent plan also costs more because it gives the same insurer $192,785 at age 65 in retirement benefits. You can also have a combination of term and whole life insurance to make a policy that covers the specific needs of a family. Whole life insurance builds guaranteed cash value and although dividends are not guaranteed, diviidends can provide additional benefits.
Everyone has different circumstances; however both plans offer some financial security for individuals and their families. Many people think they can’t afford insurance so they never consider the option. But $15.49 is an amount most can pay. The cost of not having insurance can be a big toll for a family.
Kent Schiner, a financial adviser (CLU, ChFC), says “Life insurance is a character purchase because it is for the benefit of another even though the insured has use of the cash values during his lifetime; a win-win situation”
