A Case Study
A Case StudyJonathan and Andrea have three beautiful children: Lucas, Samantha, and Liam. Jonathan is an engineer at a local architectural company, and Andrea is a stay-at-home mom. Recently promoted, Jonathan has begun to think more about the future of his family and the financial protection he can provide for them.
If something were to happen to Jonathan, his family wouldn't be able to maintain their current lifestyle. Andrea would need to sell the home and find a job quickly to provide for the kids. Family vacations, private education, and the occasional shopping trip wouldn't be possible. What kind of future would Andrea and the kids have?
The Solution
Jonathan decided to purchase a $500,000 whole life policy to guarantee that no matter what happens to him, his family will have the money to continue living comfortably. Andrea would be able to continue to take care of Samantha and send Lucas and Liam to private school without having to scramble to find a job.
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*Types of life insurance available may vary. Interested individuals may or may not qualify for ERIExpress Life.
Helpful Hint
Helpful HintSave on Life Insurance Without Cutting Coverage
Life insurance can be affordable for most, but there are a few ways you can avoid paying too much.
First, purchase life insurance while you're young. Although it may not be on your radar in your 20s, 30s, or even 40s, life insurance is much more affordable when you're younger. On average, the cost for a term policy increases by 8-10% every year you delay. By the time you're 55, you could pay more than $200 per month for the same coverage you could have bought in your 20s.
Another way you can save on life insurance is by purchasing a term life policy. Because these policies expire after a certain amount of time and don't accrue cash value, they are less expensive than their permanent counterpart. Common term lengths include 5, 10, 15, 20, and 30 years.
You can also save by working with an independent agent because we can shop several different carriers to find you a policy that fits your needs and your budget.
What is cash value?
Think of cash value as a sort of savings account attached to your whole or universal life insurance policy. It is only part of whole and universal life insurance; term insurance does not offer a cash value component.
Each time you make a premium payment, part of your money is deposited into this savings account. Over time, cash value grows as a portion of your premium payments are consistently set aside. In addition, you receive interest. Cash value and interest grow tax-deferred, meaning you won't owe taxes on them until you decide to use it.
Cash value is separate from the death benefit (also known as the face value); the death benefit is the value of money your beneficiaries receive in the event you pass away. Cash value may not be given to your beneficiaries, but is kept by the insurance company if you die. So, why would you want cash value?
Click here to learn more about the ways you can use cash value.
How does cash value grow?
With whole life insurance, your interest rate is set at a fixed rate determined by the insurer at the time of purchase. The interest rate is set so that your cash value grows to equal the death benefit.
For example, you purchase a $500,000 whole life policy when your are 30, beginning with a $0 cash value balance. When you are 60, the cash value has grown to $250,000, or half the death benefit. At 90, it has grown to $500,000, equal to your death benefit. Typically, insurance companies set the interest rate so that your cash value will equal the death benefit when you reach 100, but this can depend on many factors.
Remember, once you purchase a policy, your interest rate will not change, regardless of the interest rate environment.
Source: valuepenguin.com
Customize Your Coverage
Your needs are unique; that's why we offer a variety of life insurance riders, which are optional add-ons, that you can use to tailor your life insurance policy to fit your needs. You can use these riders to purchase additional insurance later in life, add coverage for your children, or pay for long-term care expenses.
A Look at Whole Life Insurance
Term vs. Permanent Life Insurance
