Life Insurance: What You Should Know


September is Life Insurance Awareness Month, and at Tobias Financial Advisors one of our goals is to educate our clients on the importance of Life Insurance and the role it can play in protecting their family’s financial security. 

Life Insurance may be necessary depending on your particular financial situation, whether that be income replacement, debt payoff, or liquidity for an estate tax event. Below, we look to discuss some of the more basic Life Insurance questions with the hope that you will reach out to us should you have any concerns regarding the specifics of your financial plan. 

When and Why May You Need it

  • Life Insurance may be necessary if there are insufficient assets to maintain the lifestyle of dependents
    • Consider life events
      • Marriage
      • Birth of a child
      • Divorce
      • Home purchase
    • Special situations
      • Special needs child
      • Business owners with buy-sell arrangements
      • High net worth individuals with taxable estates

Basic Types of Life Insurance

Term Life:

  • Coverage only during the stated time period. Usually 10, 20, or 30 years.
  • Lower cost and more affordable. Typically, 5-10% cost of whole life.
  • No cash payment if you outlive the term policy period.
  • May be convertible to whole life.
  • Often available through employer benefits packages.

Whole Life:

  • Policy does not expire, but can lapse.
  • Cash value grows tax-deferred.
  • Can often borrow against policy.
  • Much more expensive than term (10-20x).
  • May include surrender charges.
  • Examples: Whole Life, Universal Life, Variable Life, Indexed Universal life, Variable Universal Live, Guaranteed Universal Life.

Life Insurance: Want to Learn More?

There are many reasons why clients purchase life insurance, whether it be for family, business, or legacy protection. Each of these reasons is unique to their financial plan and should be considered thoughtfully before making a purchase. To learn more, we would encourage you to watch our Wealth Advisor, Yesenia Realejo, explore this topic in more detail here.

As always, our advisors are on hand to assist you in this thoughtful consideration and guide you through your financial planning process.

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