As we approach the end of the year, it’s a time when many of us reflect on what’s worked, what’s changed and how we want to move forward into the new year. While you’re thinking about your goals for 2025, don’t forget to check in on your life insurance policy. At The Papay Agency, we believe that reviewing your life insurance before the year ends is one of the best ways to ensure that you and your loved ones are well-protected.
Why Life Insurance Matters
Life insurance might not be the most exciting topic, but it’s one of the most important financial tools you can have. Life insurance provides you and your family with financial protection in the event of death, ensuring they won’t be left with the burden of funeral costs, debt and loss of income. Whether it’s covering everyday living expenses, paying off a mortgage or funding college tuition for your kids, life insurance can provide the peace of mind that comes from knowing your family will be taken care of if the unexpected happens.
Having the right amount of coverage gives you the assurance that your loved ones won’t face financial hardship during what would already be a difficult time.
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When Is a Good Time to Review Your Policy
As the 2024 year draws to a close, many people start thinking about their financial plans for the upcoming year. The end of the year is also an excellent opportunity to take stock of your life insurance coverage. Here’s why:
Life Changes Throughout the Year: Maybe you’ve had a baby, bought a new home or experienced a change in your income. Big life events like these could mean that your life insurance needs have changed, too. If your policy doesn’t reflect these changes, you may be underinsured or paying for coverage you no longer need.
Tax Benefits: Certain types of life insurance offer tax advantages, and reviewing your policy before the year ends can help you make sure you’re taking full advantage of these benefits. For example, some policies may allow you to contribute to a cash value component that grows tax-deferred. If your situation has changed, this might be a good time to explore different options for maximizing your benefits.
Making Adjustments Before the New Year: The beginning of a new year is a fresh start. By reviewing your policy now, you can make any necessary adjustments, whether it’s increasing your coverage, switching to a different type of policy or simply ensuring you’re on the right track.
Term Life vs. Permanent Life Insurance: Which is Right for You?
When it comes to life insurance, you’ll generally encounter two main types of policies: term life and permanent life. Understanding the differences between these can help you decide which one is the best fit for your needs.
Term Life Insurance: Term life insurance is often the simplest and most affordable option. It provides coverage for a set period, such as 10, 20, or 30 years. If you pass away during the term, your beneficiaries receive a death benefit. If you outlive the term, the policy expires, and there’s no payout. This is a good choice for people who need affordable coverage to protect their families during their working years or while they have significant financial obligations like a mortgage or student loans.
Key Features:
- Affordability: Lower premiums compared to permanent life insurance
- Temporary Coverage: Coverage for a specific term
- Simplicity: Straightforward with no complex investment options or cash value
Permanent Life Insurance: Permanent life insurance, on the other hand, provides lifelong coverage. It doesn’t expire after a set term and also has a cash value component that grows over time. This cash value can be borrowed against or used to pay premiums. Permanent life insurance is typically more expensive because of the added benefits and long-term coverage.
Key Features:
- Lifetime Coverage: Coverage for your entire life, as long as premiums are paid
- Cash Value: Builds a cash value over time that can be accessed or borrowed
- Higher Premiums: More expensive than term life, but includes both protection and investment components
Reassess Your Insurance Needs Before 2025
If you’ve experienced a significant life event this year, such as starting a family, buying a house, or taking on new financial responsibilities, your current life insurance policy might not be sufficient.
Take a few moments to ask yourself:
- Has my income or financial situation changed?
- Do I have enough coverage to support my family if something were to happen to me?
- Should I switch from term to permanent life insurance for lifelong coverage and a cash value component?
- Are there any benefits I could take advantage of before the year ends, such as tax advantages or adjustments to my policy?
If any of these questions raise a red flag, it’s a good idea to reach out to a trusted insurance professional at The Papay Agency. We’re here to help guide you through your options and ensure your life insurance coverage is exactly what you need for your unique situation.
At The Papay Agency, we’re here to help you navigate your options and ensure that you’re making the best decisions for your future.
Reach out today or call us at (843) 476-4805 to schedule a review, and let us help you start the year with peace of mind.
