Contact Information
Jo-Ann M. Dobson
Managing Director/President Oppenheimer Life Agency Ltd.
Phone: (212) 668-5890
joann.dobson@opco.com
Oppenheimer & Co. Inc.
85 Broad Street
New York, NY 10004
Life Insurance
The Role of Life Insurance
Life insurance is widely used in estate and business planning because it provides an important source of liquidity when it’s needed most; at the death of the insured. Death benefits are usually received free of income tax, and with the proper estate planning, insurance proceeds can be free of estate tax as well. Whether it is for personal, business or charitable reasons, life insurance can help you plan for the future.
Do you Need Life Insurance?
If you have loved ones who count on you to care for them, life insurance can help replace income that would be lost upon your death. Insurance proceeds can also be a source of cash to pay the deceased's debts, funeral expenses, and income or estate taxes.
If you are the sole owner of a business, how much cash will it need when you pass away? Do you expect that some of your inheritors will continue the business? If so, do you think there will be enough cash flow for them to successfully maintain the business? Insurance proceeds can help cover any cash flow shortages of the business.
How Much Life Insurance Do you Need?
Everyone’s financial situation is different so there is no simple formula for figuring out how much life insurance you need, but there are a few factors to consider:
- How much debt you have: If you have any outstanding debt such as a mortgage or car loans, an insurance policy can help to cover those payments.
- Income Replacement: If you are the sole provider for your dependents, life insurance can help to replace your potential lost income.
- Future obligations: If you want to pay for children’s education, wedding, etc. that should be taken into account when deciding how much life insurance to purchase.
- Insuring others: You should insure anyone in your life whose death would be a financial loss for you.
Types of Life Insurance
There are many different types of life insurance policies but they generally fall into two categories, term insurance and permanent insurance. Term insurance is designed to meet temporary needs and can be more affordable, while permanent insurance provides lifetime coverage.
|
|
Term |
Permanent |
|
Length of Coverage |
A specified term |
Until age 100 or later, as long as premiums are paid |
|
Premiums |
Considerably lower than permanent insurance when initially purchased |
Initially higher than term premiums, but often level for life |
|
Cash Value |
None |
Accumulates on a tax-deferred basis |
|
Key Advantage |
Typically offers the highest death benefit for the lowest cost |
Offers lifelong protection and tax-deferred savings |
Permanent Life Insurance:
Whole Life
The premiums remain the same for life, and the death benefit and rate of return on the cash value are guaranteed.
Variable Life
You pay a level premium for life and have the potential for better returns by having the option to invest the fixed premiums among investment sub-accounts, similar to a mutual fund. The rate of return on the investment options depends on their performance.
Universal Life
Offers the flexibility of varying the amount of the premium payments. Offers a guaranteed minimum death benefit as long as sufficient premium payments are made.
Variable Universal Life
A combination of variable and universal life. Premium payments are adjustable and they can be allocated among investment subaccounts.
There are a variety of life insurance plans available through several different insurance providers. An Oppenheimer Financial Advisor can help assist in finding the right plan for you and your family.
Before purchasing a policy of insurance, please review both the insurance carrier and the insurance policy carefully before investing. Any payment guarantees are based on the claims paying ability of the issuing insurance company and that those guarantees do not apply to the investment return or principal value of the underlying funds in the insurance policy.