‘Till Death Do You Pay Premiums
Are you a commitment-phobe? Do you prefer to lease instead of buy? Do you frequently use the phrase “play it by ear?” Then permanent life insurance may not be for you. But if you’re ready for a lifelong commitment… propose already! And consider buying permanent life insurance.
Permanent life insurance policies may be suitable for those who want to build a safety net for posterity, but it can also potentially be a good investment while you’re still alive. Your monthly payment is allocated to three categories: 1) the death benefit to your beneficiary, 2) paying the insurer, and 3) the cash value. The cash value is the savings component, which the company will invest, with the goal bring that it will grow over time. You can take out a loan against this cash value or withdraw the money while you’re still alive, although this could decrease the amount that goes to your beneficiary.
Now, which type of permanent life insurance should you choose? Do you play it safe? Or do you like Risky Business? If you’d prefer a more conservative plan, a whole life policy is generally the safest bet because it grows at a guaranteed fixed rate. Meanwhile, universal life policies’ cash value grows with current interest rates. They’re also more flexible, as you can make various adjustments down the line. Now the third option, if wanna go to town like Tom Cruise in a button-down, is a Variable Life Policy. These policies operate like mutual funds – the cash value increases or decreases based on how well your subaccount investments perform.
Life insurance is just one way to take care of your dependents after you're gone. For more tips, reach out to us at Centrix Wealth Partners.
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The information contained does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Centrix Wealth Partners and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice.
These policies have exclusions and/or limitations. The cost and availability of life insurance depend on factors such as age, health and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition if a policy is surrendered prematurely, there may be surrender charges and income tax implications. Guarantees are based on the claims paying ability of the insurance company.
An investment in variable life insurance involves investment risk, including possible loss of principal. The contracts, when redeemed, may be worth more or less than the total amount invested. Past performance is no guarantee of future results.
Investors should consider the investment objectives, risks and charges and expenses of variable life insurance carefully before investing. The prospectus contains this and other important information. Prospectuses for variable life insurance and their underlying funds are available from your financial advisor and should be read carefully before investing.