Life insurance basics
Term and Permanent
Life insurance is very similar to renting or owning a home with these factors weighing the decision.
Single or married with kids
Short term and long range plans
Current and future financial situation
General rules at different stages of life
Starting out career = 100% Term insurance
Married with kids = 20% Permanent + 80% Term Insurance
Retirement = 100% Permanent Insurance
"The best life insurance policy is the one that is in place when your family needs it."
How Permanent Insurance Works
Similar to how a home mortgage works...
One-third of your payment goes to owning your insurance coverage.
Two-thirds of the premium is credited to the equity=cash value.
Cash value grows from accumulated interests.
The cash value can be accessed at any time and age through withdrawals or low interest loans.
Life insurance benefit + Cash Value = Full tax free death benefit
"The purpose of life insurance is to create cash"
Cash Value Attributes of Permanent Life Insurance
Cash value attributes
withdrawal with deferred taxes
tax free low interest policy loans
loans do not have to be paid back
no age limitations
cash value and death benefits are tax free
"Life insurance turns pennies into dollars"
How much protection do I need?
10x Annual income for life insurance
5x Annual income for a severe short term or long term illness