As we wrap our series on employee benefits, we’ve discussed that many of you have group life insurance and perhaps an additional term policy outside of work. For you, we talked about the possibility that we could save you some money if you’re over 50 and healthy. I’m sure a few of you reading this may be thinking, “Okay, I’ve done that, and there’s nothing more I need to do. I’m set. When I retire I won’t need life insurance because I’ll have saved up enough money.”
Labor Day typically cues up the start of the fall work season at the Family Financial Partners office, as we review the performance of financial plans and portfolios for our client families. In addition, this is the time when we review employee benefits with our client families, as many of you are receiving your renewal packets. If you’re self-employed and think this newsletter isn’t for you, simply skip down to where you see “self-employed” in bold.
You know you need it. Let’s explore your options.
This month, in honor of Life Insurance Awareness Month, we’ve been talking about all things life insurance. We’ve covered some of the most common myths and misconceptions about life insurance, and the reasons why it’s so important to talk about it. Today, I wanted to address some of the basics about the different types of life insurance, and choosing the coverage that’s right for you and your family.
First, there are two main types of coverage for you to consider: group or employer-sponsored life insurance, which is coverage that you sign up for with your employer’s human resources office, along with other employee benefits. Some employers offer basic plans at low or no cost to you, as well as options for more coverage at a higher cost. We can help you sort through what your employer offers if you’re not sure what you’re looking at. The second main type of life insurance is individual coverage that you purchase through an insurance company for yourself or a loved one.
The most basic policy you can buy is term coverage, meaning that you lock in a certain premium rate for a certain period of time, typically 5, 15 or 20 years, or until it’s needed. Many people, after maintaining this type of policy for a number of years, opt to convert a portion to whole or permanent life insurance, which is guaranteed coverage for the rest of your life. It comes with higher premiums because of that guarantee, but it also provides the benefit to your estate and your loved ones without picking a death date, as you essentially do with term coverage.
Additionally, whole or permanent coverage allows the policyholder to borrow from the policy, as it builds cash value over time. [Keep in mind: If tax-free loans are taken and the policy lapses, a taxable event may occur. Loans and withdrawals from life insurance policies that are classified as modified endowment contracts may be subject to tax at the time that the loan or withdrawal is taken and, if taken prior to age 59½, a 10 percent federal tax penalty may apply. Withdrawals and loans reduce the death benefit and cash surrender value. Guarantees subject to the claims paying ability of the underlying issuer.]
Life insurance can be confusing, I know – and we see many people who forgo coverage simply because they don’t take the time to understand the process and options that are available. Many people also think life insurance is too expensive, but, as I noted in my last newsletter, statistics show that most people believe coverage costs much more than it actually does.
If you have any questions at all about life insurance, need to apply for coverage, or would like to sit down with our team and review any current policies you have, please, don’t hesitate to pick up the phone. A 10 or 15 minute consultation could mean peace of mind for your family.
September is Life Insurance Awareness Month, and today I wanted to talk about the most common myths and misconceptions we hear about this important part of your comprehensive financial plan. I know it’s difficult to think about the unthinkable, but having the right coverage can keep a loss from becoming a financial burden as well.
You may have noticed we’ve been talking about life insurance this month. Each September is designated as Life Insurance Awareness Month by LifeHappens.org, and we always take the opportunity to further educate our client families by sharing stories and information.
Last week, Alex and I were honored to attend a conference for our broker-dealer/advisory company, where our team was recognized as one of the top in the country. Over and over again, other advisors and attendees came up and asked us what products we recommend, and where in the world we find all the great clients we work with.
September is Life Insurance Awareness Month, and as always, we’ll be sharing lots of information throughout the next few weeks about this important part of your financial plan.
For those of you who are clients with us at Family Financial Partners, you may or may not remember our first few meetings where we asked all sorts of seemingly random questions. We don’t do this to pry – we’re trying to get a good feel for the various financial puzzle pieces you have in your life, and these might be things you haven’t even thought about – at least in terms of how they affect your finances.
In a perfect world, where everyone knew exactly what they should do with their finances and made perfect financial decisions, there would be no need for you to use a financial planning team. The reality is, however, that we all live in an imperfect world, where all of you are very intelligent and highly skilled at something…other than financial planning.
You might not – but the answer depends on several factors.
The other day, we had some new clients come in for their first meeting. This couple is in their late 50s, about five years from retirement, and they’re super excited because they’ve just paid off their last consumer debt – all credit cards, lines of credit on their home, car payments, and yes, even their mortgage were officially paid in full. If I were part of the Dave Ramsey show, they’d have been yelling “We’re Debt Free!”
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