Insurance planning is a crucial element of any financial plan. The benefits of insurance are diverse as there are many different types. However, the benefits of insurance whether it is disability insurance, health insurance, property and casualty insurance, life insurance, etc. they all have one thing in common, insurance is designed to protect against risk. That is why proper insurance planning with experienced insurance consultants is essential to protect yourself and your assets.

When you have insurance to protect you and your loved ones against a loss, what you are inherently doing is transferring the risk to another party. Obviously, this party (IE — Insurance Company) will not take this risk on for free. They will be collecting a premium from the insured in exchange for this risk. One of the most common forms of insurance discussed in the financial planning process is life insurance.

Life insurance is a focal point in setting up a financial plan not just because of the protection it provides, but because it can get confusing. Term insurance, whole life insurance, universal life insurance, accidental death insurance, second-to-die insurance, the list goes on and on. Which type should you choose? How much death benefit should you have? How long do you need it for? To determine what policy is best for your specific situation it’s advisable to sit down with a financial planner or insurance consultant and have an in depth conversation about it.

All life insurance policies can be categorized into two different types, temporary insurance and permanent insurance. With temporary, or term insurance, you pay a fixed premium for a stated period of time. Term insurance is the most basic form of life insurance. It is the most inexpensive and has no wealth accumulation features to it. Conversely, permanent insurance policies are more expensive and have wealth accumulation. They offer the basic protection that temporary life insurance offers, and include a cash value component. The most common types of permanent insurance are whole life and universal life.

Which type is best for you? Again, it totally depends on your unique situation and consulting with a financial planner is strongly recommended. At Clay Northam Wealth Management we work with our clients to design a comprehensive plan that is both efficient and effective. Servicing all of Southern California, we have 2 convenient offices located in the Los Angeles and Orange County. Please to not hesitate to contact our offices to see how we can be of value to you.