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September is Life Insurance Awareness month! As your financial partner, it's our responsibility to educate you on the importance of life insurance and the role it plays in protecting your families' financial security. Life insurance isn't something people like to talk about, especially young people. After all, thinking about dying and what happens to family or loved ones after you're gone isn't the easiest thing to do.

Insurance Basics

When you purchase a life insurance policy, you're agreeing to pay a regular premium, or fee, often on a monthly or quarterly basis. In return, the insurance company agrees to pay a death benefit of a certain value to your beneficiaries if you die. Most people designate their spouses, partners, or children as beneficiaries, but you can choose anyone you want, such as a parent or a business partner.

So how large a policy do you need? There's no set amount. One rule of thumb says that you should have insurance that's five to seven times your annual salary, while another says ten times your salary is appropriate. One thing is for sure, though: If you're like most young people, you have financial obligations like mortgages and children's tuition ahead of you. So you'll need more insurance than older people who've already paid off those kinds of expenses.

Do You Need It?

The first question to ask yourself about life insurance is whether you need it. If you're married or if you have children, then you definitely do. It's the only sure way to provide income for your family's financial needs, from funeral expenses to mortgages and education costs.

One rule of thumb says that you should have insurance that's five to seven times your annual salary, while another says ten times your salary is appropriate.

If you don't have a spouse or kids, or if you're planning to stay single, and there's no one else that depends on you for financial support, then you probably don't need insurance. If you die and leave debts behind, your creditors can try to collect from your estate. But they can't collect from your parents or other people unless those people cosigned the loan agreement.

For a Time or for Life

There are two main types of life insurance: term insurance and whole life insurance. As the name suggests, a term policy covers you for a set period of time, usually 5, 10, 15, or 20 years. Then you must renew it.

Since term insurance is much cheaper than whole life, many financial experts recommend it for young people. The limited time frame can be good, too, since it gives you the chance to switch over to a whole life policy in the future, if you choose to.

Other advisers suggest you might want to purchase a whole life policy right away. In addition to providing coverage for life, these policies set aside a portion of each premium payment to accumulate as tax-free savings. You can even use these tax-free dollars to pay your premiums on some policies. If you need help sorting out your questions, you have access to FCCU Financial Advisors* offered through CUNA Brokerage Services Inc. (CBSI).  CBSI is a broker/dealer focused on serving credit union members and is an affiliate of CUNA Mutual Group.  FCCU Financial Professional, Tom Lynch, can tailor your insurance needs to your personal financial situation. Simply give Tom a call at 920-563-7305 to schedule your no cost, no obligation appointment to discuss your life insurance options.

Whole Life Insurance v. Investments

Even though whole life insurance provides tax-free savings, just as some types of investments do, that doesn't mean that the two things serve the same purpose. Many people make the mistake of thinking that they can provide financial security for their loved ones just by investing. Or they think that they can use the value that builds up in their insurance policy to support themselves in retirement instead of using investments and other savings.

A financial plan that omits insurance or investments can be a dangerous proposition. You run the risk of leaving your loved ones with financial burdens if you die, not having the money to retire the way you want, or both. To have a secure financial strategy, you should consider both insurance and investments. FCCU Financial Professional, Tom Lynch, can help you review both your insurance and investment needs. Contact him today to begin the planning process!

*Representatives are registered, securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, which is not an affiliate of the credit union. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. FR-3234158.1-0920-1022