It’s a fact…we will all…die. It is not a subject most people are comfortable discussing. Rather than addressing this fact, we avoid it at all cost. Not today. Having an adequate life insurance policy is one of the most important things you can do for your family.
In 2014, I had 14 clients, friends, and a family member die. They all died of different causes. Some of the deaths were caused by cancer or other illness and some simply wore out their bodies. The one thing I noticed was that none of their relatives complained that their loved one had left behind too much money. In a couple cases, they left nothing behind, leaving their spouse to figure out how to survive financially while caring for their three young children.
I want you to prepare for this inevitability, unless you just want to leave your loved ones in a bad financial situation.
You need life insurance.
If you are married, you need life insurance. If you have children, you need life insurance.
There are two basic types of life insurance: term insurance and cash-value insurance.
Term insurance is the least expensive of the two options. Term insurance is a type of life insurance policy that provides coverage for a certain period of time, or a specified “term” of years. If the insured dies during the time period specified in the policy and the policy is active, then a death benefit will be paid. With this type of policy, you pay an insurance premium each year for a designated period of time, such as 10 years, 20 years, or 30 years. Once the period is over the premium increases. Term insurance has no cash value. The only time term insurance is worth anything is when the insured is deceased.
The other type of insurance is cash-value life insurance. Cash-value life insurance is a policy that pays out upon the policyholder’s death, and also accumulates value during the policyholder’s lifetime. The policyholder can use the cash value as a tax-sheltered investment (the interest and earnings on the policy are not taxable), as a fund from which to borrow money, and as a means to pay policy premiums later in life, or they can pass it on to their heirs. Cash-value life insurance is typically more expensive. But, as long as you make your premium payments, the policy stays in place. Over time, the policy builds up a cash value which can be used for retirement when the policy is designed right.
Term insurance and cash-value insurance can be used in combination with each other for a dual purpose – death benefits and retirement savings.
How much life insurance do you need? That depends on your situation. A good rule of thumb is you want to replace what income you bring in, or what it would cost to replace you, such as a stay-at-home mom or dad.
Most people leave their families in a financial mess because they don’t think they will die anytime soon. Don’t be one of those people. Don’t leave your family in a bad financial situation. Contact me to discuss which type of life insurance policy is right for you.