When it comes to creating their financial plan, most people don’t enjoy thinking about life insurance. It’s no fun to think about death, but making sure your loved ones will be taken care of is an essential component of estate planning. Let’s talk about the life insurance basics you need to know before selecting a policy.

What is life insurance?

Life insurance is an agreement between you and your insurance company. You agree to make regular payments, called premiums, and the insurance company agrees to pay your beneficiaries a tax-free sum when you pass away. There are various types of life insurance policies, the leading options being term life insurance and permanent life insurance.

Term Life Insurance

For many people, it’s common to start with a term life insurance policy. Term life insurance:

• Covers you for a specific period (usually 10 to 30 years).
• Costs less, making it popular with families on a budget.
• Replaces income lost during your expected working years.

Many term insurance policies have conversion privileges, which means you can convert the term policy to a permanent policy to fit your situation. That brings us to the second main category for life insurance: permanent life insurance.

Permanent Life Insurance

It’s sometimes referred to as whole life insurance, though there are a few different types of policies in this category, including whole life, universal life and variable life. While the details differ, the basics are the same. Permanent life insurance:

• Costs more than term life insurance but provides lifelong coverage.
• Pays a guaranteed death benefit (assuming you pay your premiums).
• Builds cash value over time as the policy ages on a tax-deferred basis.
• May allow you to use the cash value during your life.

Withdrawals do have tax implications and decrease the ending value of your policy, but knowing you have access to the funds if you need them can give you peace of mind.

Who needs life insurance?

Now you may be asking yourself, “Do I need life insurance?” For a lot of people, the answer is yes — especially if you have others relying on you for financial support and want peace of mind that those loved ones will be taken care of in the event of your death.

Life insurance can:

• Cover funeral costs.
• Make sure your child has a college fund.
• Cover your debts to avoid leaving your family with debt.
• Support your family’s living expenses.

For help with choosing the right type of life insurance — or anything else on your financial journey — schedule a complimentary consultation with a CFS^* Financial Advisor today.

Questions? Contact a CFS^* Financial Advisor.

Grow has contracted with CUSO Financial Services, L.P. (CFS) to provide investment services, and your CFS^* Financial Advisor will help you build a plan that meets your needs. The advisor will look at your current spending, saving and investing, learn about your goals and priorities, make objective recommendations and support your efforts moving forward through the implementation and management of your plan.

SCHEDULE A COMPLIMENTARY CONSULTATION

^*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. The Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members. For specific tax advice, please consult a qualified tax professional.

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