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Life Insurance
Buying life insurance may be one of the most important purchases you’ll ever make. We all have a responsibility to protect those who depend on us with a sufficient amount of life insurance protection. It can provide those who are left behind with a lifetime of financial security.
  • What You Should Know
  • Term Life
  • Permanent Life
  • Talk to a Financial Consultant
What You Should Know About Life Insurance
Life insurance is a contract between an insurance company (the insurer) and you (the insured). In its most basic form, a life insurance contract is a promise by the insurer to pay a sum of money to a person you choose (the beneficiary) upon your death. In return, you pay premiums to the insurer.

Who Buys Life Insurance?
If someone depends on you financially, chances are you need life insurance. However, life insurance can play an important role in your overall financial strategy. Depending on your needs, you may purchase life insurance to provide:

• Income for your dependents
• A sum of money to cover large expenses, such as college tuition or mortgage balance
• An inheritance for your loved ones
• Liquid assets to pay for funeral arrangements, final medical costs or estate taxes
• A cash value accumulation that can be borrowed against during your lifetime
• A sum of money to your beneficiaries that is free from state and federal taxes

What about taxes?
The proceeds from your life insurance policy pass to your beneficiaries free of federal or state income taxes. Although, in certain instances the proceeds may be subject to estate taxes. Contact an estate planning professional or your tax advisor for more information.

There are two basic types of insurance—term and permanent. In addition, there are variations on these two basic types.
Term Life Insurance
Term life insurance is generally the least expensive and least complicated type of life insurance. It provides insurance protection at a low cost for a specified period of time, such as one, 10 or 20 years. If you die within the term period, a death benefit is paid to your beneficiary. If you are still living at the end of the term, protection ceases unless the policy is renewed. There is no "accumulation" element or cash value with term insurance.

Who is it for?
• People with a temporary need for life insurance protection
• Those who need a large amount of insurance protection, but have limited budgets
• People with specific business needs (for example, business owners who want to cover the life of a key employee who has a set number of years until retirement)

Benefits:
• It provides insurance protection for a low cost (at least initially).
• If your needs change, most policies allow you to convert your term policy to a permanent life insurance policy without having to take a medical exam or provide other information about your health.
• Term insurance is a good way to supplement other coverage when you have added financial responsibilities for a given period of time (for example: mortgage, college expenses).
• Death benefits are generally received free from income tax.

Some drawbacks to consider:
• Premiums generally increase with age, and they could become unaffordable later in life.
• There is no cash value element, so you miss the tax-deferred cash value of permanent life insurance policies, such as Whole Life.
• Once the term period expires, the insurance coverage ceases and the policy has no further value.
Permanent Life Insurance
While term insurance provides protection only for a limited time, permanent insurance can provide protection for your lifetime, or up to a specific age—at which point the insurer will pay the policy owner the cash value. In addition, permanent life insurance policies can build cash value that you can borrow against and, in some instances, withdraw to help meet future goals such as paying for a child’s college education. You will usually have to wait a period of time after the purchase of your policy to accumulate sufficient cash value to borrow against.

Permanent life insurance policies enjoy favorable tax treatment. Cash value generally grows on a tax-deferred basis, meaning that you pay no taxes on earnings in the policy while it remains in force. Policy loans generally are not considered taxable income, and withdrawals generally can be taken up to the amount of premiums paid without being taxed.

The two general types of permanent life insurance policies are Whole Life and Universal Life.

Who is it for?
• People who may need life insurance for a long-term.
• People who may be interested in accumulating policy cash value to provide funds for education, retirement or other future goals.
• People who want the tax-favored treatment of permanent life insurance.

Benefits:
• Over time, permanent insurance may be more economical than term insurance since premiums do not increase with age and the policy can build cash value.
• Earnings and certain withdrawals and loans may qualify for tax-favored treatment.
• Policy loans and withdrawals provide access to your cash value.
• If you cancel the policy, the accumulated cash value is yours to use as you wish. Surrender charges and taxes may apply.
Speak to a Financial Consultant
OMNI Community Credit Union's Financial Consultants are experienced in helping you determine what your long-term investment objectives may be, what your level of risk tolerance is, and what types of investments are most appropriate to help you achieve your goals. Take the time to discuss your goals with your financial consultant to help you make the right decisions for your individual financial needs. Ask an OMNI Financial Consultant how they can help you:
• Classic Financial Planning
• Asset Management
• Tax-advantaged strategies
• College funding
• Retirement funding and distribution
• Long-term care insurance
• Estate planning
• Trust services
• Small business planning
• Business and succession strategies
Schedule a free consultation with an OMNI Financial Consultant by calling (269) 441-1400 or 1-866-OMNI-WOW (1-866-666-4969).