Financial planning without life insurance is like rearranging the deck chairs on the Titanic.
For life insurance to make a difference in your financial plan, you must buy it and keep it. One of the first things you should do is go to lifehappens.org and click on the “calculators” tab. This tab has options to help you determine how much life or disability insurance you need, as well as an option called “human life value calculator.” This calculator helps you assess the financial loss your family would incur if you were to die today. I recommend you review all three options, then click over to the “videos” tab to see and hear real-life stories of how people’s lives were impacted by the gift of life insurance or the lack thereof.
Once you have taken the time to determine how much life insurance you need, I recommend you contact a local life insurance professional. I say local because life insurance is not a once-and-done purchase. Life doesn’t stay static. Things change, and insurance should be reviewed annually. Life insurance needs change for many reasons, including when you marry, have children, buy a house, open your own business or take on debt. Reviewing life changes and the needs generated by those changes is much easier when you review them with a person you know, like and trust instead of with someone you’ve never met on the other end of a 1-800 number.
If you think life insurance costs too much, have you considered the cost to your loved ones of not having life insurance? Have you ever taken the time to sit and think about how different life would be financially for your family if you died? Life insurance is a gift. For children and younger people, it guarantees insurability — meaning buy it now while their health is good, and if the unforeseen happens and their health prevents them from purchasing coverage later, their family will be covered by the purchase their parents or grandparents make today.
For families, life insurance can mean grief is not compounded by financial worries like how to pay for a funeral, keep a roof over their heads, pay day-to-day bills or send their children to college. Life insurance for business partners can provide the funds to buy out a partner’s spouse and keep the business going while they find a replacement.
HERE ARE A FEW OTHER GREAT THINGS ABOUT LIFE INSURANCE:
Some companies offer what we call living benefits. Living benefits means a portion of the death benefit can be accessed to cover chronic, critical or terminal illness while you are still living, subject to policy requirements. These additional funds can make it possible for you to stay at home.
Term life insurance is a great way to obtain coverage to fill a temporary need at a fraction of the cost of permanent coverage. Within certain time limits, term life polices often can be converted to permanent polices, and this guarantees insurability.
When properly designed, indexed universal life insurance can be used to help build tax-free income at retirement.
The Secure Act, effective as of Jan. 1, 2020, made multiple changes in the taxation of assets transferred to heirs. Life insurance is a tool to help transfer these assets, with the potential for significant reduction of the taxes.
In most cases, life insurance proceeds are not taxable to the beneficiary.
As my husband, Lee, likes to tell people, don’t die for free.
Kathy Rogers is the vice president of Marston Rogers Group, a life planner and financial consultant. Reach her at (228) 206- 5902 or Kathy@mrg.life.