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Individual life insurance secured in Pennsylvania.
Life insurance offers crucial financial protection for your family when they need it most. The financial impact of your death goes deeper than replacing your income.
Life insurance provides money for final medical expenses, funeral costs, childcare, education, mortgage and utility payments, and the other long-term expenses your loved ones will encounter.
Freedom Insurance Group works with individuals, couples, and families in Pennsylvania and New Jersey to review life insurance needs, compare the options available, and obtain coverage that provides meaningful financial protection for their needs, budget, and stage of life.
What is Individual Life Insurance?
Individual life insurance is an insurance contract that pays your listed beneficiaries after your death. This type of insurance creates a financial safety net for your loved ones while they re-organize their lives around a new reality.
Life Insurance premium payments are based on a death benefit that will be paid, tax-free, to whoever you designate as your beneficiaries. You can name one person to receive the full death benefit, multiple people who will split the amount, or even a trust that holds the funds for selective distribution to beneficiaries. Life insurance payouts are exempt from federal income tax, state income tax, and state inheritance tax. This allows your survivors to use the money however it is needed without worrying about tax implications at the end of the year.
Who Needs Life Insurance?
Realistically, everyone should have at least a minimal life insurance policy. Not only are there multiple expenses related to a person’s death, but there are also debts to settle, existing bills that have to be paid, and new financial decisions to make in order to move forward.
Life insurance protects people and their priorities in the following scenarios and more:
- Married and co-habitating couples who rely on two incomes are able to cover bills like the mortgage, car payments, and loan payments in the short term. As the surviving partner adjusts to a new lifestyle, they might also use life insurance funds to offset lost contributions to Social Security or retirement plans.
- Parents, including stay at home parents, provide a safety net through life insurance policies. The surviving parent or guardian can pay for childcare, school expenses, and the other costs of raising children without the added financial pressure to earn more income right away.
- Single adults protect their parents and siblings from unexpected burdens by leaving an insurance policy that covers funeral expenses, final bills, and the remaining balances of any co-signed loans.
- Elderly adults and adult caregivers ensure that medical bills, funeral and burial expenses, and the cost of continuing care can all be managed through an affordable life insurance policy.
- Business owners and key employees provide for business continuation and succession with a company-funded life insurance plan that offers the funds needed in a buy-sell agreement.
- Children can achieve lifetime insurance with a low-cost whole life policy long before they have any pre-existing conditions when they are listed as the insured on a policy owned by their parents or guardians. When they reach a certain age (usually 18 or 21), the policy transfers to their ownership, giving them valuable protection.
Many factors impact the availability and premiums of a life insurance policy. The younger and healthier a person is when they purchase a policy, the less expensive and more comprehensive it will be. Pre-existing conditions are not a total disqualifier for life insurance in the way they once were, but they can severely restrict a policy while costing more in premiums.
What Can Life Insurance Help Pay For?
Once beneficiaries receive the death benefit payment, they are free to use the money in any way that is needed. If the beneficiary is a trust, then the deceased person’s estate plan dictates how the money can be distributed and used.
The very first thing that most life insurance benefits are used for is to pay for hospital or medical bills, funeral and burial expenses, and any other immediate bills. Once those costs are covered, the balance of the insurance might be used for:
- Covering the standard bills that would be paid by that person’s income
- Paying off a mortgage, car loan, credit cards, or other debts
- Paying for childcare, education, or other activities that sustain a child’s lifestyle
- Supporting a surviving spouse now and in the future due to the loss of retirement and Social Security contributions
- Providing business income until the owner or key employee can be replaced, or to facilitate a buy-sell agreement between heirs and business partners
- Giving beneficiaries the financial flexibility to take time off of work or re-organize their lifestyle
It is a good idea to make sure your beneficiaries know what they can expect to receive from your life insurance benefits and if you have any preferences about how they use the money. If you have very specific instructions for how the funds are to be used, work with your attorney and financial advisor to create a trust for implementing them.
Types of Individual Life Insurance
There are different types of life insurance that offer a great deal of flexibility for policyholders. An experienced insurance agent will listen closely to your priorities and needs before recommending the type of life insurance that fits your budget and covers your preferences.
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Providing for Your Family
Risk Factor
Raising a child can be a rewarding life experience, but it is also very expensive. It costs hundreds of thousands of dollars to raise a child to age 18, with college tuition, fees, room, and board resulting in another potentially enormous expense. If you were to die tomorrow, would funds be available to provide for food, clothing, day care, and educational expenses for your child?
Solution
Having life insurance could secure the future for your children if you have an untimely death. With a life insurance policy, there could be enough income to help pay for everything your child might need while growing up.
Mortgage Payments
Risk Factor
After your death, any outstanding debt and financial obligations do not disappear. Your home is probably the costliest and most significant property you own. A mortgage payment is a large burden for a spouse or partner to carry.
Solution
A life insurance policy would allow your spouse or children to pay off your outstanding debts and spare them the stress of making monthly payments on the home.
Auto Payments
Risk Factor
Many families lease or finance their automobiles these days. If the primary earner in the family were to die, the family could be left with outstanding car payments for years to come.
Solution
A life insurance policy would allow your spouse or children to pay off your outstanding debts and spare them the stress of making monthly payments on your car(s).
Funeral Costs
Risk Factor
An average funeral can cost tens of thousands of dollars, and that's without unnecessary options or luxurious services. A death in the family is stressful enough; why add the hefty bill of a funeral to that stress?
Solution
A life insurance policy can easily cover the cost of a funeral. Your family will be able to think of you and have peace of mind without being burdened by funeral costs.
Protecting Your Retirement Savings
Risk Factor
Once you retire, you will be living off social security, and if you are lucky to have them, a pension or retirement fund, too. But what if the surviving spouse has been relying on you to fund retirement for the couple? Premature death of an earner can affect sources of retirement benefits such as Social Security.
Solution
Life insurance can help support a surviving spouse during their retirement.
Protecting Your Small Business
Risk Factor
If you passed away, would your business suffer? There are many complications and financial issues that can arise due to the death of a business owner. Many people overlook this predicament.
Solution
A life insurance policy can keep a business moving along even during tough times, such as the loss of the business owner/partner. Key person life insurance is payable to the company and provides money for training and hiring of a new employee. A buy-sell agreement, funded by life insurance, allows the other partners in the business to buy the deceased’s share of the business, which will provide money for his or her family.
Spousal Support / Income Replacement
Risk Factor
Many people mistakenly think that they don’t need life insurance if they don’t have children or if their children are grown. However, your financial responsibilities fall to your family when you are gone.
Solution
Life insurance can replace the income you would usually bring in and help support your spouse or adult children, ensuring your loved ones are able to maintain the lifestyle they're accustomed to.
Term Life Insurance
Term life insurance is designed to provide coverage for a set amount of time. Policies can be purchased for a number of years, with 30 years being the most common term. If you die anytime during that term, your policy will pay out the full death benefit. Term life insurance premiums are often the most affordable, and they are a popular choice for adults who are in the highest financial responsibility period of their lives. They may have a spouse, mortgage, children, and debt that all depend on their income. The expectation is that at the end of the term, the individual will have greatly reduced expenses and can take out a smaller policy. Term policies can be renewed, but the premiums usually increase with the new term.
Whole Life Insurance
Whole life insurance does not have an end date and is a permanent insurance option as long as the premiums are being paid. Whole life policies build cash value as the premiums are paid, which allows the funds to be used during the policyholder’s lifetime. Owners can take loans against the policy or use the cash value in other ways. Premiums for whole life insurance are higher than term policies, and there are some flexible premium plans that allow individuals to pay more during their income-producing years in order to stop paying premiums after retirement.
Universal Life Insurance
Universal life insurance is a combination insurance policy and investment vehicle. Like a whole life policy, universal life insurance builds cash value. But these policies also earn interest, allowing for more opportunities to grow the plan’s value and death benefit. Universal life policies contain flexibility for loans, variable premiums, and cash distributions.
The right policy is a highly individualized decision for each person. At Freedom Insurance Group, we take all the time our clients need to fully explain the life insurance options available in Pennsylvania and New Jersey. Life insurance is a complex topic, so it is important to work with agents who listen carefully to your goals and budget, share accurate information based on your age and health, and make practical recommendations.
How Much Life Insurance Do I Need?
The right amount of life insurance is different for every individual. Your age, health, income, debts, family structure, financial goals, and expected expenses construct a complex network of needs that should be evaluated by an experienced life insurance agent. An independent insurance agency that is local to you in Southeastern Pennsylvania or New Jersey adds the value of both shopping for plans from multiple carriers and having a strong understanding of your current and future financial picture in this region.
For most people, life insurance policies should cover immediate, ongoing, and future expenses that their loved ones will need to cover. Your current lifestyle expenses are a great starting point, but we will also look at what you expect to spend in the future, so that your insurance can provide for that as well.
How Freedom Insurance Group Helps You Compare Life Insurance Options
As an independent insurance agency serving the Philadelphia region for over 20 years, Freedom Insurance Group is dedicated to helping our clients protect their future. Life insurance can be a difficult conversation, but it’s a necessary one. Our goal is to put our clients at ease, educate them about their options, and then get to work identifying the right policy for their unique situation.
Independent life insurance agents in Pennsylvania and New Jersey have the benefit of working with many carriers. This flexibility allows us to shop a variety of plans and types of insurance, so our clients are truly making an informed decision when they settle on a life insurance policy.
Whether you have an existing policy that may not provide adequate coverage, or you are exploring life insurance policies for the first time, please get in touch with our team. We will walk you through all the options, explain everything, and help you apply for your new life insurance policy. Request your quote through the online form below, or give us a call at 215-673-0300 to get started.
Individual Life Insurance FAQs
What is individual life insurance and how does it work?
Individual life insurance is a private contract that provides a financial safety net for your loved ones after you die. By paying your premiums, you secure a lump sum, tax-free payment as a death benefit to your designated beneficiaries.
Who actually needs an individual life insurance policy?
Almost everyone can benefit from a policy, as it can be used to pay for everything from immediate final expenses to mortgages to outstanding debt. All adults should have a policy, with the amount of the insurance and purpose of the death benefit being determined for individual circumstances.
What can my beneficiaries pay for with my life insurance payout?
Once your beneficiaries receive the tax-free death benefit, they have the ability to use those funds however they need to. Most beneficiaries prioritize paying off final expenses. After that, the rest of the money is usually used to pay the bills and invest in future spending that your income was meant to cover.
What is the difference between types of life insurance?
There are three primary types of life insurance called Term, Whole, and Universal life insurance that are tailored to different stages of life, budgets, and individual goals. Life insurance can be a complex topic, and it is wise to work with an experienced local agency that listens to your needs.
How do I know how much life insurance I need in PA or NJ?
The exact amount of coverage is highly unique to your situation. It depends on your current age, health, income, debt, future goals, and the people who rely on your income. An independent agent can help assess your complete financial picture and make recommendations about the type of policy that will meet your needs.
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