Personal & Family Life Insurance FAQs:  Read more Valuable Business Uses of Life Insurance: Read more Charitable Uses of Life Insurance and Annuities: Read More How Life Insurance Helps Resolve a Family's Financial Needs:  Read More

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PERSONAL AND FAMILY LIFE INSURANCE

A. Introduction.

            This page of the website is designed to give the reader a basic understanding of life insurance fundamentals: The nature, purpose, and desirability of life insurance are discussed and the types of coverage available are explained. The reader is also encouraged to review the Life Insurance FAQ (frequently asked questions) sheet and the Quick Links located to the left. Feel free to call, email or write Providence for a free no obligation consultation. You can also download a preliminary application for insurance, prepare it and mail it to us for further processing.

            This page limits discussion to personal and family uses of life insurance. If you are interested either in a business policy (key-man, buy-sell agreement, or deferred compensation) or a policy that will benefit your church or charity while generating income tax deductions for you and your estate, then click on the appropriate line above the heading.

B. Life Insurance Protects and Serves Families and Individuals in Many Ways.

n      Survivor Protection: Provides tax-free funds for dependents: These monies help the family (1) to replace the deceased provider’s lost wages, lost job benefits (e.g. medical insurance), and the cost of services that he or she would have provided; and (2) to create or to preserve educational, spousal retirement, savings and repair, maintenance and emergency funds 

n      Estate Conservation and Liquidity: Provides immediate funds to pay estate and inheritance taxes, estate administration and probate fees and expenses, medical bills, funeral, burial and other final expenses, mortgages, debts and other creditors

n      Estate Creation: provides tax-free sums of money for dependents and beneficiaries

n      Cash Accumulation and Savings: permanent (whole) life policies also provide accumulating cash values that grow an a tax-deferred basis. Upon death, the benefits and values pass to the beneficiaries income tax free

n      Family Protection and Peace of Mind: Life insurance reduces uncertainty. It   Replaces the risk of a very large loss (income and value) with a known smaller loss (premiums). The harsh economic impact of an untimely death transfers from the family to the insurance company.

C. How Much Life Insurance Do You Need? For some guiding principles

D. Types of Coverage.

            Providence offers various forms of the two traditional types of life insurance policies: Permanent (Whole) Life and Term Life. When planning your insurance coverage, you should select the type of insurance product or product mix that is appropriate to your family needs and budget. You need to consider:

• The amount of insurance you and your family need
• The extent to which that need will change (up or down) in the future
• The cash flow and earnings that are available to pay for coverage
• Within the context of the purposes for which you need life insurance, the duration of the need for coverage: permanent or temporary
• The extent to which you realistically expect to be disciplined in your personal savings

In the process of analyzing your needs and budgetary constraints, remember that Providence can sell a mix or blend of permanent and term insurance; that this blend can then be adjusted or converted to a significant extent, as family budgets and needs change. Click for some tips and information on Blended Coverage  

1. Term Insurance.

Providence Association’s Term Life Insurance has the following characteristics:

• It provides protection for a specified period of time (term) only.
• It is pure life insurance, providing only a death benefit and no cash value savings or accumulation for policy loans or more immediate needs.
• It is suited for temporary needs – e.g., unpaid mortgages and loans, education fund coverage, periods of extreme family dependence, etc.
• The policy is renewable, but only to point when certain set ages are attained.
• The policy can be converted to cash value permanent insurance when the family budget allows; this can be done without any additional proof of insurability.
• The premium increases to that appropriate to the age attained at the time of renewal or conversion
• Because of its limitations, term insurance is generally less expensive than permanent insurance for younger people.

Term insurance is generally recommended:

• For younger individuals and families who face both a need for very high levels of insurance to protect dependants and serious budgetary limitations.
• When there are gradually disappearing obligations such as mortgages, educational needs, student loans and debts.
• When temporary coverage is expected in anticipation of conversion to permanent cash value insurance.
• When a temporary booster is needed to enhance permanently expected needs.

For more information on Term Insurance and for rates, or use the Quick Links to the left. You can also submit a preliminary application or ask for some quotes and information by contacting us.

B. PERMANENT (WHOLE) LIFE INSURANCE

Providence Association’s Whole Life Insurance has the following characteristics:

• Permanent Protection – the benefits will be payable to dependents and beneficiaries tax free, regardless of when death occurs
• Cash Value – a portion of premiums will be invested into cash value and will grow on a tax-deferred basis: These funds are available for policy loans, immediate cash and/or retirement savings
• Broad Benefits – permanent insurance provides the broadest range of protection that is both economical and valuable. For very economical periodic premiums, all of the objectives of life insurance are met.
• Level Premium – the premiums remain level and will never increase
• Protection will never expire
• Bonus: Paid premiums and savings will be recovered with an added tax free benefit bonus when it is needed the most
• Dividends: available for most forms of permanent coverage in paid-up additions or cash

Permanent insurance is generally recommended:

• To cover inescapable permanent needs: funeral, burial, monument, death tax, final illness and other final expenses (Calculate Your Final Expenses)
• For the mutual protection of couple’s in retirement to cover any and all potential lost income and benefits that an untimely death might precipitate and to leave the surviving spouse an appropriate fund for needs
• As an essential element of consideration in estate planning
• To cover any other permanent needs for funds
• As an excellent means to leave an inheritance and legacy  for future generations
• As a method for accumulating cash value and guaranteeing a return on premiums
• To create an additional nest egg for retirement and other needs
• As a means to endow your church or favorite charity, foundation or scholarship fund

For more information on Whole Life Insurance and for rates, or use the Quick Links to the left. You can also submit a preliminary application or ask for some quotes and information by contacting us

C. BLENDED PERMANENT AND TERM COVERAGE

            Most individuals and families will have a blended need for permanent and temporary coverage. What is more, it is fairly unlikely that a young family with children will have the means to acquire strictly permanent insurance. Consequently, Providence recommends that each client calculate permanent and temporary risks and needs separately and match the appropriate product to that need.

            For example, that amount that will cover the family’s final needs, its needs for a savings and reserve fund and its needs for support through retirement should be covered by permanent insurance. Amounts needed to cover mortgages, education funds, loans and other temporary obligations, on the other hand, should be covered by supplemental term insurance.

When the budget permits, that term coverage can be converted to permanent coverage and can serve as a savings and inheritance vehicle. If the budget does not so permit, then the term coverage can gradually be liquidated as needs disappear. In fact, Providence is one of relatively few insurance companies that permits an annual face value reduction, at the discretion of the insured. Click for more information on this blended approach.

D. HOW MUCH DOES LIFE INSURANCE COST?

            Select the Quick Links on the left to term and to whole life to see more information on those products, some payment options, and the rates for all of these. You can also submit a preliminary application or ask for some quotes and information by contacting us.

E. FOR MORE INFORMATION ON LIFE INSURANCE, Quick Link on the left or here: Tips and Information.