Life Insurance - AXA Equitable
- Details
- Category: Life
- Published on Thursday, 15 July 2010 08:32
At some point in your life, you'll probably be faced with the question of whether you need life insurance. Life insurance is a way to protect your loved ones financially after you die and your income stops. The answer to whether you need life insurance depends on your personal and financial circumstances.
Should you buy life insurance?
- You should probably consider buying life insurance if any one of the following is true:
- You are married and your spouse depends on your income
- You have children
- You have an aging parent or disabled relative who depends on you for support
- Your retirement savings and pension won't be enough for your spouse to live on
- You have a large estate and expect to owe estate taxes
- You own a business, especially if you have a partner
- You have a substantial joint financial obligation such as a personal loan for which another person would be legally responsible after your death
In all of these cases, the proceeds from an insurance policy can help your loved ones continue to manage financially during the difficult weeks, months, and years after your death. The proceeds can also be used to meet funeral and other final expenses, which can run into thousands of dollars.
If you're still unsure about whether you should buy life insurance, a good question to ask yourself is: If I died today with no life insurance, would my family need to make substantial financial sacrifices and give up the lifestyle to which they've become accustomed in order to meet their financial obligations (e.g., car payments, mortgage, college tuition)?
If you need life insurance, don't delay
Once you decide you need life insurance, don't put off buying it. Although no one wants to think about and plan for his or her own death, you don't want to make the mistake of waiting until it's too late.
Periodically review your coverage
Once you purchase a life insurance policy, make sure to periodically review your coverage – especially when you have a significant life event (e.g., birth of a child, death of a family member) – and make sure that it adequately meets your insurance needs. The most common mistake that people make is to be underinsured. For example, if a portion of your life insurance proceeds are to be earmarked for your child's college education, the more children you have, the more life insurance you'll need. But it's also possible to be overinsured, and that's a mistake, too – the extra money you spend on premiums could be used for other things. If you need help reviewing your coverage, contact your insurance agent or broker.
Life Stage: Just Starting Out
When you are young and healthy, just starting out in your career, buying life insurance may be last on your to-do list. It shouldn't be - for a few reasons.
Cash Value
The one that most people think of is to provide financial protection for family members and others with whom you share financial obligations if you die prematurely. And that is important.
But you should know that permanent life insurance also builds cash value, which grows tax-deferred. The younger you are when you buy a policy, the more cash value you have the opportunity to accumulate, not only for your heirs, but potentially for your own needs as well.
Help Protect Those Who Mean The Most To You
Life insurance is not just for people with children. Even if you are still single, consider who may need financial protection if you pass away
- Co-signers of student loans or mortgages, who would be responsible for your debt
- Parents or grandparents you may help to support
- Those who would have to take care of your funeral expenses.
If you are married without children and you own a home, your spouse might need your income replacement in order to help keep the house. Even if you are renting, that income could save your spouse from having to find another place to live - possibly in reduced circumstances. If you have very young children, your spouse may have even more need to replace your income.
Life Insurance Options For Those On A Budget
For those on a budget, Term insurance is often an attractive option, because of its generally lower cost, even though it does not build cash value. If you buy a Term policy, make sure you can upgrade it to permanent insurance in the future without another medical exam. AXA Equitable term policies have this option built into them.
You may also want to consider AXA Equitable variable life, which offers some flexibility in how much and how you schedule your premiums.
Once it is issued, cash-value life insurance is in force for life, as long as you pay the premiums. Premiums at issue are lower at a younger age, and you may be able "freeze" the rates. You could be paying the same premium at age 50 as at age 25.
Are you at risk for a serious medical condition that runs in your family? It's much easier to buy a life insurance policy when you are still healthy - just make sure it has a guaranteed insurability rider so you can purchase additional insurance if you eventually need it.
Should your need for the death benefit decrease, you can access funds from a cash-value policy - to enjoy during your working years or use as retirement income. Even if you opt not to buy life insurance at this time, definitely consider disability insurance to replace lost income if you are seriously injured.
Life Stage: On Your Way
At this stage of life you've become more established in your career path, and your income is likely to be growing. You might be married (or thinking about it) with children (or planning for them). Now is the time to reassess the amount of insurance you purchased when you were just starting out, as your policy may no longer be enough to cover a family's needs.
If you already have a Term policy, now may be the time to switch to permanent insurance that has the potential to build a cash value that you can access for needs in the future.
Financial Protection and Personal Satisfaction
If you've had a permanent life insurance policy all along, good for you. If you aren't yet financially protected, it is certainly not too late to enjoy the benefits of life insurance, knowing that:
- Your premiums are helping to build a cash value that can grow tax-deferred, and that you can access for your future needs.
- You are taking good steps to protect yourself and your loved ones. Protecting your children's future drives home the need for life insurance as nothing else can. Both spouses should have a policy to provide income replacement.
Whether you have insurance yet or not, this is an important time to ensure your family is adequately covered, so talk with your financial professional.
Things To Consider: If You...
- Work as a stay-at-home parent or homemaker, think of how much it would cost your spouse to hire someone to do all your work.
- Are a single parent, you carry a heavier-than-usual burden of responsibilities. You, especially, need life insurance to protect your children's future. If you are a single parent who is divorced, you can purchase a policy on your ex-spouse as well - to replace child support and alimony payments if your ex doesn't already have a policy to cover them.
- Own a small business, a properly structured life insurance policy can protect your family by protecting your business, as well. For more information, see our For Employers section.
- Are now living in a more expensive home with higher mortgage payments (or if you know that is your goal) evaluate the value of getting higher coverage
A Word About Insurance And Disability
While long-term care may seem a distant need, now may be the best time to plan for this possible need, while you are younger and your health is good.
You should know that several of AXA Equitable's life insurance products offer a Long Term Care Services rider that could help pay some long-term care expenses. Your financial professional can help you decide if this option is appropriate for you.
Life Stage: Nearing Retirement
As you begin to think about your goals for retirement, it is time to decide if your insurance coverage is still appropriate to your needs, now and into your retirement years.
If you have built a cash value with permanent life insurance, be sure you understand the ways your policy offers you to access those funds for your present or future needs.
If you have a Term policy, consider carefully whether you need to renew for the next term. Keep in mind that now, while you are still working and in good health, may be the time to convert to permanent insurance.
Also remember that once you retire, employer-provided life insurance will end. If you have relied on your company's policy up to now, consider purchasing your own coverage.
Are Your Needs Decreasing?
Although your children may be grown and your mortgage balance may be shrinking, you may still have family financial obligations.
- College bills or loans for your children or grandchildren, that your policy's benefit could help them pay
- The care of an aging parent or other family member
- A financial legacy you may want to leave
Speaking Of Your Legacy
If your estate consists mostly of property instead of money, remember that a policy can provide your heirs with the cash they will need to pay estate taxes. Now is also a good time to think about updating your beneficiaries on your existing policy or policies.
Part of building a financial legacy is conserving what you have built. So consider long-term care insurance as well. If you or your spouse should become ill and unable to care for yourselves, the high cost of nursing care or a nursing home could wipe out your children's inheritance.
You should be aware that several of AXA Equitable's life insurance products offer a Long Term Care Services rider, that could help pay some long-term care expenses.
Nearing retirement is also a good time to take stock of your total situation with your financial professional, who can alert you to the circumstances and possible scenarios that people often overlook.
Life Stage: At Retirement
Typically, if you've been paying premiums over a number of years, your life insurance has a meaningful cash value. Your children may well be independent and making their own way, now. You and your spouse, we hope, have built a retirement plan that will allow you to live comfortably.
But when you talk to your financial professional about structuring your retirement portfolio, don't forget to be sure you take insurance needs into account. Depending on your situation, you might benefit from continued or even increased coverage - for estate tax purposes, and because special circumstances might arise that could devastate your savings or estate.
Although it may be tempting to reap the benefits of the accumulated cash values of your permanent insurance policies, remember that the amount you take now will be deducted from the death benefit that you planned to pass on to your heirs.
Life Insurance and Estate Planning
Your Life Insurance policy can be a powerful estate-planning tool. With an AXA Equitable policy, the benefit is usually paid without delay - this can help your heirs pay estate taxes, funeral expenses and other bills without having to liquidate part of your estate.
Life insurance proceeds are usually income tax-free and can be set up to bypass probate. Your financial professional can help make sure your insurance program is structured so that the proceeds from your policy won't add to your estate tax liability.*
A long illness is always a possibility that must be considered. If that should occur, massive health expenses could decimate your assets, or be passed on to your spouse or children if you die. Also, a surviving spouse may be unable to manage alone and have to move in with other members of the family - putting a significant financial burden on them.
Source: AXA Equitable