When was the last time you really thought about your life insurance policy or reviewed your life insurance needs? Chances are, if you don’t live in the world of wealth management like us, it’s probably been longer than you’d like to admit or perhaps it’s never even been more than a fleeting thought. You know, one of those, “I probably need to check into that soon”. Well, the reality is that life insurance can often be misunderstood, misconceived or altogether avoided, but when armed with the right information and resources, life insurance becomes a valuable tool in your financial plan.
What is the importance of having life insurance? It’s the peace of mind you get from knowing your loved ones will be taken care of – it can pay off debts and loans, help fund a child’s future education, or provide a steady source of income for family members. And while many Americans see the value in life insurance, less than half actually have life insurance policies – 95 million adult Americans to be exact, according to industry research group LIMRA.
If you’re within that group, we want to provide you with three reasons why you should rethink your decision and add a life insurance policy to your coverage:
- Income Replacement. This the most basic purpose of any life insurance policy - replacing your annual income until the age you would have retired. When you have lost your ability to get out of bed and go to work, how will you survive without your income? From here, you should be able to determine how much life insurance you need.
- Protecting and Taking Care of Loved Ones. Consider whom you are leaving behind and how they will be impacted by the loss of your income. Your spouse and your children are the most important part of your life. It goes without saying that you would do anything to ensure their comfort and safety. Financially, you should be able to say the same.
- Tax-Free Wealth. You have the ability to build up tax-free wealth that you can use either during your lifetime or to be passed on to your heirs. If you build a variable universal insurance policy correctly, you can use it as a big Roth IRA. Post-tax money goes in, but the money grows tax-free and can potentially be pulled out tax-free.
“Life insurance is a financial product like so many other financial products. It is sold out of fear or need instead of out of good solid mathematics,” comments Money Concepts Financial Planner, Christopher Puffer. “Take this into consideration: Life insurance is the only investment vehicle that can guarantee a sum of money to be available when the most critical bills are due.”
Your policy isn’t a gamble; it is a vital part of the economic plan to keep your family financially secure. If you are underinsured, we strongly encourage you to seek the financial protection you need today. Keep in mind the following questions when determining your life insurance options:
- What is the need for the insurance?
- How much do you need?
- How long of a term do you need on the policy?
- Explore your options thoroughly. Don’t make price your only deciding factor!
When life throws you a curve ball, you want to be prepared for it. Be proactive and select a licensed financial planner to serve as your trusted advisor now and in the years to come.
Christopher Puffer, Financial Planner