Stonegate Insurance Agency

Life Insurance

This is only a sketch of coverage, read your policy for a detailed description of your policy.

There are two basic types of life insurance, term and cash value. Cash Value comes under many names but they all have the same result, build cash value. Term does not build cash value. We can equate them to renting and owning property. You sell what you own for its value and get cash. If you move out of a place you rent you get nothing back.

Question: Why would I want cash value life insurance?

Answer: Since we do not know when we will leave this earth you may need insurance to pay tax on your estate, pay for a funeral, or leave something to your loved ones or charity. If you think of building a home you need a good foundation to build upon. Cash value insurance is that foundation. When you buy it the premium you pay remains the same for as long as it is in force.

Question: But I’ve always thought “Buy term and invest the difference” isn’t this true?

Answer: Yes and no. Again we don’t know when it’s going to happen. In the past few years many people have seen their investment go down. People that were going to retire had to put those plans aside. Banks are paying what on savings accounts? Insurance companies are still paying what they said they would in their contract. Mutual funds have lost value and you still may have to pay tax on their capital gains. Cash value life insurance builds tax free.

Question: How much is enough if I want to build the foundation you talk about?

Answer: I think between $50,000 and $100,000 depending on your age. The younger you are the more you should consider. The cost of $100,000 30 year term at age 30 is about $188.00 per year, while cash value runs $516.00 per year. Do the math! In about 12 years you will get all your money back if you cancel. The term return is $0.00.

This is not an insurance contract. You should read your contract.