Life Insurance: Do You Need It?

Life insurance is a way to protect your loved ones financially if and when you pass away.

If any of the following are true in your current situation, then you should consider getting or increasing your life insurance coverage.

  • You are married and you spouse depends on your income
  • You have children or other family that is dependent on you for support
  • Your savings won’t be enough for your spouse to live on
  • You own a business
  • You have a personal loan, mortgage, or other debt for which another person would be responsible for after your death

The proceeds from life insurance can help your loved ones to continue on financially without having a huge burden in the case that you die.   Obviously funeral expenses are are another thing that must be paid for, and that usually costs at least $10,000.  Plus the huge benefit is that life insurance proceeds are not taxable.

Living without life insurance can be scary, is a risk that should not be taken.  One of the biggest paybacks for those who have life insurance is the peace of mind that comes along with knowing your loved ones will be protected and set financially in the case of your death.  Even if you have term insurance and don’t actually end up dying before the end of the term, the increased peace of mind is worth it.

Term vs Whole Life Insurance

Term coverage is life insurance for a specific number of years, and when it ends, you have to reapply or decide to go without.  Whole life is coverage guaranteed to pay out whenever you die as long as you keep paying the premium.   Term is much, much cheaper and more simple.  Whole life has many more options and side benefits.   For most people we suggest term coverage during the working years as you are building up your savings.  Then the goal should be to be “self insured” by the time you retire, by having a large amount in retirement savings that would pass on in the case you die.   But in some cases whole life is the better option.

 

I am going to go over 6 common myths that you might have heard about life insurance.

1. The coverage you get at work is enough.

Life insurance through your employer can be a big financial help, but usually doesn’t even come near the amount  of coverage you need.  It is also dependent upon your employment with that company which can never be guaranteed.  The coverage you get from work may be enough, but only if you’re single, in good financial standing, and have no dependents.  For most people, the term policy offered through their employer just won’t be enough to sustain their families’ needs.

2. Only the working spouse needs life insurance.

Life insurance on the breadwinner is there to fill in the gap left by the loss of a income, but that discounts all the valuable work a stay-at-home partner contributes to the family. How would you pay for child care, the cleaning, or even the time off of work for the grieving period, let alone the definite costs of the funeral, without a little financial help in the event of such a loss? It can be hard to monetize the many contributions of the non-breadwinner, but to overlook them would be a bad idea.

3. The value of your life insurance coverage should equal two years’ salary.

Everyone’s financial circumstances are different..  You might require more coverage than two years’ salary if you incur medical bills or other debts, have a young family, a mortgage to pay, or any number of life obligations to meet. If you don’t have any dependents, and you don’t have a mortgage, then two years’ salary may even be excessive.  A lot also depends on what gives you peace of mind regardless of your circumstances.

4. Single people without dependents don’t need to own life insurance.

While it’s true you might not have a family to provide for, odds are you’ll still have to cover the cost of your funeral, pay off debts, and maybe leave a little bit behind for your parents and or close family and friends.

5. You don’t need professional services to buy life insurance.

We do not charge a dime to get quotes or meet and go over your situation.   In the cases I have seen, most people who try to go online and get life insurance without an agent end up paying way more money then if they just contacted an agent.   We work with almost all life insurance companies to get the best price for our clients.  With the knowledge of and access to a myriad of different policies, riders, coverage amounts, prices, and benefits of different companies, a licensed agent can help you find exactly what you need for the right price.

6. Life Insurance is expensive

Compared to health insurance, life insurance is walk in the park.   Unlike health insurance, prices on life insurance have actually dropped over the last few years.  The price you pay is dependent on your age and health, but most people are surprised as to how affordable it can be.  For example, for healthy people under the age of 35 you can get $500,000 of term coverage for under $25 a month.

 

Whether you have life insurance or not, it would be a smart financial decision to talk to us about it and see if we can either get you covered, or get you quotes to see if we can save you money compared to your current policy.  What is there to lose?

By Jimmy Hancock



References

  1. Life Insurance. Digital image. Veldsteon.blog.hr. N.p., n.d. Web. 1 Aug. 2017.

Why you Need Disability Insurance

disability insuranceAs I grow older and now that I have a child, I am becoming more aware of the importance of insurance, and especially disability insurance. It is not a very talked about thing, in fact, I had never really heard of it until a few years ago.  So here is a good Google definition of disability insurance.     “Disability Insurance is the industry name for a plan that provides for periodic payments of benefits when a disabled insured is unable to work. The insurance product is designed to replace most of your gross income on a tax-free basis should illness keep you from earning an income in your occupation.  A professional with a family, for example, should consider disability insurance a necessity.  ” 1

Don’t I already have  coverage from my work?

Most employers have workers compensation coverage which is similar to disability insurance, but only applies to disabilities/injuries that come from the workplace.  If you are disabled by something that happens outside of work, then you are out of luck.  That is unless you have disability insurance.  Also, even if you are getting paid by workers compensations, you can still receive income from your disability insurance.

Doesn’t the government have disability coverage?

SSDI or Social Security Disability Insurance is coverage that anyone who has recently worked and payed in to Social Security qualifies for.   The issue with relying on this coverage is that the average monthly benefit  is only $1148. 2.    That is under $14,000 annually.  I don’t know many families that can live on that amount.  Also you can receive benefits from both SSDI and private disability insurance.   Another issue with SSDI is that it is the much more limited definition of disability as compared with private disability insurance.   Many people are denied SSDI when they are not “fully” disabled, but cannot do any work in their industry due to their disability.

Disability Insurance Options

When you get disability insurance you have the option of choosing the monthly benefit amount and length of time you can receive that amount while disabled.  The bigger those numbers, the more expensive it is.  There is also a feature called Return of Premium you can add to your policy.  This makes it so that if at age 67 you get back all of the money you have paid in premiums minus any claims you have received.  Thus, it can be a type of a retirement savings account, that also protects you during disability.

Pricing

An average healthy worker in a non labor field can get basic coverage for a very reasonable price of around $20 a month including return of premium.  For more extensive coverage the price would be closer to $40 or $50 a month.  Contact me for a free quote.

By Jimmy Hancock

 

  1. NAHU. “Consumers Guide to Disability Income Insurance.” NAHU.org. National Association of Health Underwriters, n.d. Web. 16 May 2016.
  2. Thomson Reuters. “Private Disability Insurance vs. SSDI.” Findlaw. Thomson Reuters, n.d. Web. 17 May 2016. <http://injury.findlaw.com/accident-injury-law/private-disability-insurance-vs-ssdi.html>.



Life Insurance 101

life insurance 2The subject of life insurance may not sound all that exciting, but it is an extreme benefit to those who have it.    A lot of people think that since the concept of life insurance is simple, the products are simple as well.  That is not true at all, especially today where there are so many options and riders.

Living without life insurance can be scary, is a risk that should not be taken.  One of the biggest paybacks for those who have life insurance is the peace of mind that comes along with knowing your loved ones will be protected and set financially in the case of your death.  Even if you have term insurance and don’t actually end up dying before the end of the term, the increased peace of mind is worth it.

Whether you have life insurance or not, this is applicable to you.   I am going to go over 5 common myths that you might have heard about life insurance.  In addition to your own edification, and frankly, for the safety of your loved ones’ financial futures, it’s important to understand exactly what life insurance is, what it does, and how — not to mention if — you should make a move either to purchase or upgrade your coverage. Read the myths below to see if you need to adjust your thinking when it comes to life insurance.

1. The coverage you get at work is enough.

Life insurance through your employer can be a big financial help, but usually doesn’t even come near the amount or length of coverage you need.  It is also dependent upon your employment with that company which can never be guaranteed.  The coverage you get from work may be enough, but only if you’re single, in good financial standing, have no dependents and aren’t worried about estate taxes.   For most people, the term policy offered through their employer just won’t be enough to sustain their families’ needs. After all, your insurance payout must not only support your family financially and pay for your funeral, it must also pay off any debts, such as the mortgage or car loan, as well as settle up with Uncle Sam.

2. Only the working spouse needs life insurance.

This is a curious, and completely inaccurate belief, yet it somehow persists. Life insurance on the breadwinner is there to fill in the gap left by the loss of a income, but that discounts all the valuable work a stay-at-home partner contributes to the family. How would you pay for child care, the cleaning, or even manage the household, let alone the definite costs of the funeral, without a little financial help in the event of such a loss? It can be hard to monetize the many contributions of the non-breadwinner, but to overlook them would be remiss.

3. The value of your life insurance coverage should equal two years’ salary.

Everyone’s financial circumstances are different, and so are their life insurance needs. You might require more coverage than two years’ salary if you incur medical bills or other debts, have a young family, a mortgage to pay, or any number of life obligations to meet. If you don’t have any dependents, and you don’t have a mortgage, then two years’ salary may even be excessive.  A lot also depends on what gives you peace of mind regardless of your circumstances.

4. Single people without dependents don’t need to own life insurance.

While it’s true you might not have a family to provide for, odds are you’ll still have to cover the cost of your funeral, pay off a few debts, and maybe leave a little bit behind for your parents and or close friends.  Also, using a life insurance policy to fund a gift to a favorite charity can be a wonderful legacy for a single person to leave behind.

5. You don’t need professional services to buy life insurance.

A professional life insurance agent can help you identify the needs you have, what you must protect and how best to protect it. With the knowledge of a myriad of different policies, riders, coverage amounts, prices, and benefits of different companies, a licensed agent can help you find exactly what you need for the right price.

Life insurance is an important product for most everybody to consider, but it helps if you have your facts straight. So whatever else you think you know about life insurance, you might consider running it past an agent or advisor.  If you have questions or would like a life insurance quote, contact us.

By Jimmy Hancock

 

What are the Hidden Fees associated with Annuities?

scaredIt’s not that there’s anything wrong with an investor paying fees for certain investments in their portfolio, but when it comes to annuities the key is ‘transparency,’ notes the WSJ’s article on getting to the bottom of hidden annuity fees.

What are some of the fees carried by a popular annuity choice among investors, namely the variable annuity?  In the case cited by the WSJ, an annuity holder was paying the following:

* Administrative expenses: 1.4%

* Special rider to ‘lock in returns:’ 1.1%

* Mortality expense fee, wrap fee and adviser fee: 5.8%

* Surrender fees vary

The grand total of 8.3% in fees, in this case, turned out to be higher than the annual return on the annuity, plus a surrender fee of $10,000 to get out of their annuity contract.

Annuities and the 403(b) retirement portfolio.

Generally, for non-profit organizations, or public education entities, employees are usually enrolled in a 403(b), which is their tax-advantaged retirement account. Like a 401(k), employee contributions are channeled to the fund via salary deferrals to help the account continue to grow tax-deferred; and, when it’s withdrawn, that’s when the income is taxed. Where do insurance products like a variable annuity fit into a 403(b)? In short, it doesn’t, according to Neal Frankle, a financial writer on Money/US News.

“To add insult to injury, many plans offer fixed or variable annuities, which adds even greater expense to the mix. It makes absolutely no sense to buy an annuity inside a retirement account, and I can’t understand why any plan would have such provisions, but they often do.”

A traditional IRA, or Roth IRA, are reasonable alternatives to consider, Frankle notes.  There is no point in putting an annuity in any retirement account, because of the extreme fees you pay along the way.

Annuities may have their place and serve a purpose, but if you are looking for long term growth in your retirement account without fees cutting into gains, look for a low fee retirement plan that is well diversified.

By Financial Social Media and Jimmy Hancock

5 Life Insurance Myths Busted

Why you need a financial coachLife insurance may not sound all that exciting, but when you do stop to think about life insurance and you, it’s not uncommon to assume that since the concept of life insurance is simple enough, so too are the products. It’s also fairly easy to rationalize the things you really don’t understand about life insurance, and before you know it, you’re harboring potentially damaging life insurance myths.

In addition to your own edification, and frankly, for the safety of your loved ones’ financial futures, it’s important to understand exactly what life insurance is, what it does, and how — not to mention if — you should make a move either to purchase or upgrade your coverage. Read the myths below to see if you need to adjust your thinking when it comes to life insurance.

1. The coverage you get at work is enough.
While this may, in fact, be the case if you’re single, in good financial standing, have no dependents and aren’t worried about estate taxes, for most people, the term policy offered through their employer just won’t be enough to sustain their families’ needs. After all, your insurance payout must not only support your family financially, it must also pay off any debts, such as the mortgage or even the MasterCard, as well as settle up with Uncle Sam.

2. Only the working spouse needs life insurance.
This is a curious — and wildly inaccurate — belief, yet it somehow persists. Life insurance on the breadwinner is intended to fill in the gap left by the loss of a paycheck, but that discounts all the valuable work a stay-at-home partner contributes to the relationship. If you’re used to this arrangement, how would you pay for child care or the cleaning, or even manage the household without a little financial help in the event of such a loss? It can be easy to overlook the many contributions of the non-breadwinner, but to do so would be remiss.

3. The value of your life insurance coverage should equal two years’ salary.
Everyone’s financial circumstances are different, and so are their life insurance needs. You might require more coverage than two years’ salary if you incur medical bills or other debts, have a young family, a mortgage to pay, or any number of life obligations to meet. If your lifestyle is more modest and you’re not financially responsible for anyone, on the other hand, then two years’ salary may even be excessive.

4. Single people without dependents don’t need to own life insurance.
While it’s true you might not have a family to provide for, odds are you’ll still have to cover the cost of your funeral, pay off a few debts, and maybe leave a little bit behind for your parents. And as one MSNBC article on the topic suggests, using a life insurance policy to fund a gift to a favorite charity can be a wonderful legacy for a single person to leave behind.

5. You don’t need professional services to buy life insurance.
While this is, in fact true, as any consumer can go online and shop for, and even buy, term and permanent life policies, electing to go it on your own can be detrimental to your financial future. A professional life insurance agent advisor can help you identify the needs you have, what you must protect and how best to protect it. With the knowledge of a myriad of different policies, if you’re honest about your financial and life circumstances, a professional can not only help you determine how much coverage you need, but also help decide whether a term or permanent policy is right for you. They can even customize a plan to meet your unique needs.

Life insurance is an important product for most everybody to consider, but it helps if you have your facts straight. So whatever else you think you know about life insurance, you might consider running it past an agent or advisor.

Authored by Financial Social Media (financialsocialmedia.com)