Life Insurance

You are irreplaceable, but protecting your family against the loss of your income is the paramount reason to purchase a life insurance policy. Life insurance can also have a “living benefit” which can be used as vehicle to help fund asset protection, children’s education, retirement, supplement long term care, estate tax planning, and strengthen your overall financial foundation.

Your life insurance needs often depend on a number of factors, including whether you're married, the size of your family, the nature of your financial obligations, your career stage, and your goals. There are a number of approaches you can use to figure out how much insurance you should have.

Family Needs Approach - What does your family need to survive without its primary source of income? This approach to estimating your insurance needs focuses on satisfying the basic financial obligations and needs of the family. Generally, a surviving family will need:

• Immediate needs at death, such as cash needed for estate taxes and settlement costs, credit card and other debts including mortgages (unless you choose to include mortgage payments as part of ongoing family needs), an emergency fund for unexpected costs, and college education expenses.
• Ongoing income needs for expenses related to food, clothing, shelter, and transportation, among other things. These income needs will vary in amount and duration, depending on a number of factors, such as your spouse's age, your children's ages, your surviving spouse's capacity to earn income, your debt (including mortgages), and whether you'll provide funds for your surviving spouse's retirement.
• Special funding needs, such as college funding, charitable bequests, funding a buy/sell agreement, or business succession planning.

Human Life Value (HLV) - Is another life insurance analysis methodology. HLV calculates the economic value of a person’s life and is heavily based on the individual’s earning ability. The HLV result is the amount a family would require to replace future lost income and other economic benefits provided by the decedent in order to maintain the same standard of living had the death not occurred. The basis of the HLV calculation is the present value of future lost income.

Which type of insurance you choose depends on your specific needs, your purpose for buying insurance, your planning goals, and what you can afford. Additionally, the cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. While all life insurance is specifically designed to aid your beneficiaries with financial burdens, there are many types of life insurance that offer different “living and death” benefits.

Term Insurance - can be a cost-effective type of insurance that covers you for a specific period of time (10, 20, or 30 years, for example). Typically term insurance is used for shorter term protection. Term insurance does not have cash value, in some instances can be converted to permanent insurance, and it ends after the contract period ends, which, without proper planning, could be when you need it the most.

Permanent Life Insurance - covers you for your lifetime, allows you to accumulate retirement assets, gives you access to cash value that you can withdraw tax-advantaged when you need it, can cover two spouses under one policy, and can be structured to increase or decrease the amount of death benefit over time. Permanent insurance is appropriate for longer range planning and can be combined with term insurance to achieve both short- and long-term goals.

Business Owners - Business owners commonly use life insurance to fund buy/sell agreements, provide executive benefits, and protect themselves against the loss of a key person.

There are several “rules of thumb” that are sometimes used to help determine the necessary life insurance coverage. Unfortunately, those types of estimates are too often inaccurate and fail to accommodate any unique situations or expectations. Determining the proper type and amount of insurance coverage is often a combination of art and science, and an experienced advisor can help you determine the most suitable combination for you and your family.

For a complimentary evaluation of your insurance needs, please go to Initial Phone Consultation to schedule a date and time that is most convenient for you.