Insurance
Protecting your Legacy: The
Facts About Life Insurance
A key component of a well-built retirement plan, life insurance provides a death benefit to your beneficiaries and can replace some of the income you would have earned. You want to be able to replace your income to your spouse and kids to make sure they live the life you want, even if you couldn’t. It could aid in preserving your savings, maintaining your family’s standard of living, safeguarding your education funding, and paying off a mortgage. The life insurance policy that is right for you depends on many factors, including your budget, the amount of coverage you need, and the length of time you would likethe coverage to last.
There is no hard and fast rule about the amount of life insurance you need, but here is a table to show you some of the benefits of different types of life insurances out there: term, whole, universal, and variable universal life insurance.
- This assumes the contract qualifies as life insurance under section 7702 of the Internal Revenue Code and is not a modified endowment contract (MEC) under section 7702A. Most distributions are taxed on a first-in/first-out basis as long as the contract meets non-MEC definitions under section 7702A. Loans and partial withdrawals from an MEC generally are taxable and, if taken prior to age 59 1/2, may be subject to a 10% penalty.
- This assumes the contract qualifies as life insurance under section 7702 of the Internal Revenue Code and is not a modified endowment contract (MEC) under section 7702A. Most distributions are taxed on a first-in/first-out basis as long as the contract meets non-MEC definitions under section 7702A. Loans and partial withdrawals from an MEC generally are taxable and, if taken prior to age 59 1/2, may be subject to a 10% penalty.