Life Insurance
As we know, there is nothing more important to your family, heirs, estate and business than adequate life insurance. PFP Group offers several types of Life Insurance policies for it’s clients. A cash value life insurance policy (not Term Life Insurance) is the single most important component of an individual’s retirement plan, significantly more so than a 401k, IRA or Roth IRA. There are very few breaks that we as individuals or business owners can get with regards to saving for retirement, and a cash value whole or universal life insurance policy is one break that we have been given by the IRS and the US Congress. Regulations stipulate that a qualified whole life or universal life insurance policy can grow tax free, have tax free loans taken from the policy, and 100% of the death benefit is passed tax free to your beneficiaries.
As a key principal or owner of your business in the event of death, corporate-owned life insurance provides coverage for outstanding accounts payable and collateral for existing debt. For family and estate planning purposes, life insurance provides the guarantee that your surviving family will be covered with enough benefit to pay existing debt such as mortgages, loans, day to day expenses in addition to education expenses.
Life Insurance however can be more than just a death benefit. Pure “Term” life insurance provides just the basic coverage death benefit without any growth or “cash value” component. With Term life insurance you insure yourself to an appropriate amount to cover such planned major expenses and pay a yearly premium for the benefit for the contracted number of years (term). In the event the policy is not exercised due to death of the insured, there is no payment or value left from the contract or premium payments for the insured.
Certain types of term life insurance allow you to insure for credit protection, mortgage payoff, or even for college planning purposes.
Cash Value life insurance is different in this regard. Cash Value life insurance allows the premiums paid by the insured to be invested to create a growth component in addition to the agreed-to death benefit. So in contrast to straight term insurance, your premiums are making money to provide for a “cash value” in addition to your contracted death benefit payout. This type of policy allows for the policy to actually become an asset vehicle to grow tax free which can be transferred to beneficiaries or your business.
Each client has different requirements and time horizons for which to use in considering which type of life insurance policy is more suited to their needs. Please contact your PFP Group advisor at contact@michiganfinancialadvisor.com for more specific information about the different policy types available and to receive a life insurance quote.