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Why You Should Care About Life Insurance
Even if you have a life insurance policy, you may not be fully protected. Learn what you can do to make sure you have the protection you need to reach your financial goals.
They are questions most of us are not comfortable discussing: What happens if I become sick and am unable to work? What happens to my family if I die unexpectedly? What if I need nursing home care when I’m older?
Everyone should understand those risks and take steps to protect themselves from the unknown, according to Cheryl Beauvais, a vice president and insurance project manager at PNC Investments.
“Most people have long-term plans for themselves at 25 years old, 50 years old and beyond,” Beauvais said.
They include things like retiring, providing education for children or improving lifestyle for themselves or their family. The risks all of us face are those we might not want to think about. We might not live until we’re 85 or 90 years old, or we’ll have to rely on someone in the family – possibly more than one individual – to earn an income.
It is important to understand the motives behind every life insurance policy.
Term Insurance
The most straightforward and inexpensive form of protection is term insurance. It offers coverage for a set period of time – most often 10 to 20 years – and provides a beneficiary with a lump sum if the insured dies during the term. Term insurance is available from financial professionals, insurance agents, and even online. However this type of policy has some drawbacks.
“Term insurance is like getting home or automobile insurance,” Beauvais said. “If you don’t have a house fire or get into an accident, you’ll pay the premium again to protect yourself for another year.”
There is no cash value with term insurance. When the term expires, the policy pays nothing. According to Beauvais, after the policy period ends, it may be renewed, but at a higher rate because by then you will be older and may not be in good health. However, there may be good reasons to pursue other insurance options.
Permanent Life Insurance
Permanent life insurance policies accumulate a cash value. They can offer protection for a lifetime and provide a beneficiary with a death benefit upon your death. Because of this, and because of the lifetime coverage and the ability to build cash value on a tax-deferred basis, the premiums are higher than for term insurance.
“There are so many different types of policies – some with cash values based on a stock market index, some based on an interest rate, some with a combination of both. Financial professionals can help you understand what type of policy will best meet your financial goals,” Beauvais said.
Financial Planning Importance
Although you can probably think of more fun ways to spend your money, buying an insurance policy is a critical part of most financial plans.
“I recommend that everyone building a plan for their financial future speak with a financial professional and discuss their needs to protect that plan from the unexpected and unthinkable,” Beauvais said. “Insurance forms the stable base of the financial planning pyramid.”
Insurance can protect you and your loved ones against the financial risks we all face: untimely death, not being able to earn income because of a disability or the high cost of a nursing home stay.
“You don’t want to make these decisions in a vacuum and without knowing your options, and that’s why it’s important to have a financial professional to help you through it,” Beauvais said.
Learn why you should review Life Insurance Policies »
Cheryl Beauvais, a vice president and insurance project manager at PNC Investments.
If you had a goose that laid golden eggs, which would you protect - the goose or the golden eggs? The 'eggs' could be homes, cars, children’s education funds, retirement assets and vacations. All of these are dependent upon a continuing source of income, which can be cut short.
Cheryl Beauvais
MYTH: I only need insurance when I have young children and a mortgage.
FACT: ; When a term life insurance policy expires, the family may still have needs and suffer financial loss in the event of your premature death.
MYTH: I don’t need insurance because I have it through my employer.
FACT: Most employer-paid life insurance isn’t “portable.” When you leave your employer, it terminates and you cannot take it with you.
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Important Legal Disclosures & Information
Important Investor Information: Brokerage and insurance products are:
Not FDIC Insured • Not Bank Guaranteed • Not A Deposit
Not Insured By Any Federal Government Agency • May Lose Value
Securities products, brokerage services and managed account advisory services are offered by PNC Investments LLC, a registered broker-dealer and a registered investment adviser and member FINRA, and SIPC. Annuities and other insurance products are offered through PNC Insurance Services, LLC, a licensed insurance agency.
The material presented in this article is of a general nature and does not constitute the provision by PNC of investment, legal, tax, or accounting advice to any person, or a recommendation to buy or sell any security or adopt any investment strategy. Opinions expressed herein are subject to change without notice. The information was obtained from sources deemed reliable. Such information is not guaranteed as to its accuracy. You should seek the advice of an investment professional to tailor a financial plan to your particular needs. For more information, please contact PNC at 1-888-762-6226.
The PNC Financial Services Group, Inc. (“PNC”) uses the marketing names PNC Wealth Management® and Hawthorn, PNC Family Wealth® to provide investment, wealth management, and fiduciary services through its subsidiary, PNC Bank, National Association (“PNC Bank”), which is a Member FDIC, and to provide specific fiduciary and agency services through its subsidiary, PNC Delaware Trust Company or PNC Ohio Trust Company. PNC also uses the marketing names PNC Institutional Asset Management®, PNC Retirement Solutions®, Vested Interest®, and PNC Institutional Advisory Solutions® for the various discretionary and non-discretionary institutional investment activities conducted through PNC Bank and through PNC’s subsidiary PNC Capital Advisors, LLC, a registered investment adviser (“PNC Capital Advisors”). Standalone custody, escrow, and directed trustee services; FDIC-insured banking products and services; and lending of funds are also provided through PNC Bank. Securities products, brokerage services, and managed account advisory services are offered by PNC Investments LLC, a registered broker-dealer and a registered investment adviser and member of FINRA and SIPC. Insurance products may be provided through PNC Insurance Services, LLC, a licensed insurance agency affiliate of PNC, or through licensed insurance agencies that are not affiliated with PNC; in either case a licensed insurance affiliate may receive compensation if you choose to purchase insurance through these programs. A decision to purchase insurance will not affect the cost or availability of other products or services from PNC or its affiliates. PNC does not provide legal, tax, or accounting advice unless, with respect to tax advice, PNC Bank has entered into a written tax services agreement. PNC does not provide services in any jurisdiction in which it is not authorized to conduct business. PNC Bank is not registered as a municipal advisor under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Act”). Investment management and related products and services provided to a “municipal entity” or “obligated person” regarding “proceeds of municipal securities” (as such terms are defined in the Act) will be provided by PNC Capital Advisors.
“PNC Wealth Management,” “Hawthorn, PNC Family Wealth,” “Vested Interest,” “PNC Institutional Asset Management,” “PNC Retirement Solutions,” and “PNC Institutional Advisory Solutions” are registered service marks of The PNC Financial Services Group, Inc.
Investments: Not FDIC Insured. No Bank Guarantee. May Lose Value.
Insurance: Not FDIC Insured. No Bank or Federal Government Guarantee. Not a Deposit. May Lose Value.
These articles are for general information purposes only and are not intended to provide legal, tax, accounting or financial advice. PNC urges its customers to do independent research and to consult with financial and legal professionals before making any financial decisions.
This site may provide reference to Internet sites as a convenience to our readers. While PNC endeavors to provide resources that are reputable and safe, we cannot be held responsible for the information, products or services obtained on such sites and will not be liable for any damages arising from your access to such sites. The content, accuracy, opinions expressed and links provided by these resources are not investigated, verified, monitored or endorsed by PNC.
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