Align your Life Insurance with your financial objectives
Have you reviewed your life insurance policies according to your current and planned financial situation? Life insurance is a tool that can be used for multiple purposes if structured correctly. The key is to only have what is necessary and not overpay!
There is an ongoing debate between two main different types of life insurance. The debate is between term and permanent insurance. Which is better is the question often asked. The answer lies in a person’s situation and objectives. Unfortunately, there is not a cookie cutter answer.
The fact is that the success of your life insurance contracts will depend on one thing…What do you want it to do for you? People who buy term life insurance typically have something with a definitive time line that they want to make sure is covered. Conversely, people who buy permanent life insurance typically want items covered with an indefinite time line.
Life Insurance is not complicated if you have clear expectations of what you want it to do for you and your family
We will help you flush out the ideas and possibilities of the different types of life insurance and then find the most cost effective solutions. We will help you to determine the suitable amount and type depending upon your current and future financial objectives.
There are several key questions to ask yourself when considering life insurance that can help you determine what you want it to do for you:
Does the desire for life insurance have a strict time line?
Examples of objectives with a strict time line are wanting to make sure a mortgage is covered throughout the life of the loan. Another example would be wanting to make sure your children’s college is covered.
Do you want the life insurance to cover anything besides the worst case scenario?
Many life insurance policies have additional riders for chronic illness if the need arises. This way if the policy owner is diagnosed with a life ending condition, they will be able to pull a percentage of the money for what suits them.
Would you want to receive all the premiums back if the life insurance was not used?
Some life insurance companies offer what is called Return of Premium (ROP). If you purchase a ROP policy and it expires, you will receive all of your premiums back. For example, if you paid $30,000 over a 30-year term policy, you would receive all $30,000 back at the end of the term.
Do you want to use the policy for estate planning purposes?
Most of us think of estate taxes when it comes to being able to leave a legacy to our children, but many times it is the income taxes that reduce the actual money that beneficiaries receive. If estate preservation is an objective, a permanent policy is a consideration.
Do you want income from the insurance policy in the future?
Some insurance policies can be structured in a way to provide future income in the form of loans. These policies are purchased in a way to grow cash value so in the future you can use that cash value at your leisure. It is very important these are funded and established correctly or the end result could be different than what is expected.
Do you want the life insurance policy to cover long-term care expenses?
The cost of long-term care can devastate a families assets if not prepared for. Life insurance can be used as a way to leverage your capital if the need for long-term care arises.
Do you simply want to leave more assets to your beneficiaries?
If you want to make sure that your beneficiaries are established financially at any point, permanent life insurance can be a way to do this regardless of your current financial situation.