Life Insurance:
Life insurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the insured's death. In return, the policy owner (or policy payer) agrees to pay a stipulated amount called a premium at regular intervals or in lump sums (so-called "paid up" insurance).
One of the problems that we often see with life insurance is a family or individual has either the wrong type of life insurance or has an excess or shortage in their overall coverage. This is certainly an easy way to derail your overall financial plan.
Types of Life Insurance?
Life insurance may be divided into two basic classes, temporary or permanent or the following subclasses: Term, Universal, Whole life, Variable, Variable Universal, and Endowment life insurance.
Who needs Life Insurance?
Most families require some sort of life insurance whether to leverage the loss of a spouse’s income to pay for children’s tuition bills, a mortgage payment or any possible potential debt that would be a burden to the surviving spouse. There are often situations where life insurance is also utilized as an estate planning tool to offset estate taxes.
Is Life Insurance a part of your financial plan?
Life insurance is an important component of every financial plan. And while it is not a comfortable subject to discuss the passing of a spouse or other loved one, we feel that it is critical to ensuring the family is adequately covered in event of an untimely loss. When determining the amount that is needed, it is important to determine the lifestyle you want to provide for your family. We will consider how much your family will need every year, being sure to take into account the effects of inflation, as well as for how long the income is necessary. We then total all of your assets and other sources of family income, reviewing pension or social security benefits the family may be entitled to and use all of these to determine the shortfall.
When we actually present the available policies and prices to the family, we lay out a spreadsheet of companies for comparison. Since we are independent, we do not have any ties to any particular company or product, allowing us to give you a truly objective view of the options. We attempt to keep costs at a minimum for our clients and will work to produce an insurance design that adequately addresses your situation to provide the right amount of coverage.
Unfortunately, for many families this is not a calculation that can be made only once. Since your needs may change over time, you should periodically review your coverage, especially if a major event occurs in your life.
