Insurance
Even as you save and invest for the future, it's important to plan
for the unexpected. That might mean setting up an emergency fund
and drawing up an estate plan. But you will likely also want to
consider purchasing a variety of insurance policies.
Worried about your financial future? Your Citi Financial Advisor
can help you with the following types of insurance.
Term-life insurance.
This is typically the least expensive way to purchase
life-insurance coverage. Term policies often cover a fixed number
of years, such as 10 or 20 years. Your annual premium will be
based on factors such as your health history, age and gender. Many
term policies offer level premium payments for the life of the
policy. If you die before the end of the term, your beneficiaries
receive a death benefit. At the end of the term, you may have the
option of renewing the policy at a higher premium, reflecting your
more advanced age, or converting it to a permanent policy without
evidence of insurability. What if you let the policy lapse? The
coverage is over—and you get nothing back.
Permanent-life insurance.
Sometimes also known as cash-value life insurance, these policies
provide permanent insurance, rather than for a fixed number of
years. They can also allow you to build up cash value, which you
can then use during your lifetime or bequeath to your
beneficiaries. If you use the cash value during your lifetime,
your death benefit will be reduced. Cash-value policies, which
involve higher premiums than term insurance, come in three
varieties. Whole-life insurance has fixed premiums and the
policy's cash value earns a fixed return. Meanwhile,
universal-life insurance offers the flexibility to vary the amount
of your annual premium. Universal-life policies also allow
consumers to permanently withdraw cash from the policy without the
interest expense associated with loans from a whole-life policy.
Finally, with variable-life insurance, you have greater investment
flexibility, including the option to invest in the stock market.
Disability insurance.
If you are still in the work force, your most valuable asset may
be your human capital—your ability to pull in a paycheck. What if
an accident or illness makes working impossible? To protect
yourself, you may want to purchase disability insurance. One rule
of thumb suggests buying enough coverage to replace 50% to 70% of
your current salary. In fact, you may have a tough time buying
insurance that will pay much more than 70%. A policy's premium
will be driven by how much income you're looking to protect, how
long you want the benefit to last, your age, sex and occupation.
Long-term care insurance.
This is a type of health insurance that can help pay medical and
other expenses if you have a chronic illness or disability.
Long-term care can be provided at home, in an assisted-living
facility or in a nursing home. Long-term care premiums can seem
expensive, but your Financial Advisor may be able to help you
lower the cost by, say, opting for a longer "elimination period,"
which is the waiting period before benefits kick in. You can
choose an elimination period of 30, 60 or 90 days or even longer,
depending on how long you think you can afford to pay health-care
costs yourself. You might also ask your advisor about other
options, such as a single-premium life-insurance policy that gives
you tax-free access to the policy's death benefit to pay long-term
care costs.