Things to Consider When Purchasing Life Insurance

• Ask yourself what expenses would change if you or your spouse died tomorrow.
• Review any group coverage you have through your employer. You may not want to rely on just group policies in the event that you change jobs or your employer changes to another insurer where you may no longer be eligible. The coverage may be inadequate.
• Review the coverage periodically to ensure it continues to meet your family’s changing needs.
• It is important to consider continued savings to fund other financial goals.

Life Insurance

The purpose of life insurance is to lessen the financial impact associated with the death of a family member, particularly the heads of the household. By planning for these situations, you have the opportunity to preserve your existing family assets and also replace the income that would have been earned. Life insurance can also bring peace of mind, knowing that these risks are covered.

The amount of life insurance coverage required depends on your specific financial circumstances. Your financial needs will change over time. For example, when children move away and become financially independent, the need to support them will disappear. Furthermore, as investments accumulate, these assets could provide income if the need arose which reduces the need for life insurance.

Life insurance is an important part of any financial plan, and there are various types of insurance policies available through your Ziegler financial advisor. Each policy is designed to suit the coverage and investment requirements of different individuals. The following information provides a description of the main types of life insurance policies available. For a complete assessment of your needs and to help you determine which options are right for you, contact your Ziegler financial advisor or our Client Service Center at 888 884 8339.

Term Insurance. The simplest form of insurance, term insurance, provides protection for a defined period such as one, five, ten, fifteen or twenty years or until the insured person reaches a certain age. Similar to your auto policy, it provides a specific coverage for a specific period and has no cash value accumulation. If the insured does not die during the period of protection, no benefits are payable at the expiration of the policy or upon the insured’s subsequent death. In some cases, such as Term100, the policy provides permanent coverage. The focus of term insurance is exclusively on death coverage. Unlike whole life insurance, premiums increase at the end of each renewal period as the insured person gets older and the risk of death increases. Cost of this insurance at older ages is sometimes prohibitive. Term insurance is generally best suited for temporary insurance needs (until the children are grown, for example) and are relatively short-term in nature.

Whole Life Insurance. In contrast to term insurance, whole life insurance provides protection for the entire life of the insured, regardless of when death occurs. Whole life policies have two components: the death benefit and a savings component called the cash value. Whole life is recommended when there is a need for lifetime protection against financial needs, and wealth preservation for current and future estate needs. The insured pays the same fixed premium throughout his or her lifetime, and the death benefit is guaranteed.

Universal Life Insurance. Similar to whole life insurance, universal life insurance policies provide lifetime protection and a savings component through investment of the premium payments. A distinguishing feature of universal life insurance is flexibility, which combines the low-cost protection of term insurance while providing you with a savings component invested in a tax-deferred account; the cash value may be available for a loan to you. Premiums, death benefits, and payment schedules can all be varied to meet changing needs. The main drawback, however, is this policy has fewer guarantees than the whole life policy. Premiums can increase, or the death benefit can decrease (or both), if the policy is not properly funded or if interest rates are lower than projected.

Variable Life Insurance. With variable life insurance, the death benefit and cash value vary according to the investment performance of a separate account fund. The accumulated cash value is directed to investments selected by the policy owner. Investments can include stock funds, bond funds, real estate funds, or a combination thereof. If the investments selected perform well, the death benefits and cash value of the policy can increase accordingly. However, if the investments perform poorly, the death benefit and cash value can decrease in value.

Variable Universal Life. Variable universal life (VUL) insurance combines the variable premium and death benefit features of universal life insurance with the investment component of variable life insurance. The performance of this policy is tied to the performance of the underlying funds selected by the insured. If returns on investment are poor, premiums may increase, the death benefit may decrease, or both. If the returns are good, there is potential for substantial cash value accumulation, death benefit increase, and the ability to skip premium payments.

Comparison of Life Insurance Products

Our insurance assessments are not financial planning (unless they are specifically called investment consulting services). They do not create an investment advisory or a fiduciary relationship (including under ERISA) between you and B.C. Ziegler and Company. Your Ziegler financial advisor will prepare a financial plan at your specific request through NaviPlan services.