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September Goal: Insure to Ensure

September Goal: Insure to Ensure

| September 08, 2017

Have you ever had to replace the roof on your home? Home repairs are not the most satisfying expenditures you will ever make. Wouldn’t new landscaping be so much more gratifying? Yet, the investment in a quality roof is a necessity. When a heavy rain comes, would you rather have some lovely flowers to gaze upon, or a sturdy roof to protect your loved ones?

Insurance is a lot like that roof. It's not a terribly gratifying expenditure, but it may offer protection against the potential financial storms that can touch down in your life.

A well-designed and balanced portfolio includes insurance coverage. Covering your assets and protecting your loved ones with insurance is one of the most important and fundamental steps in developing a sound financial approach. 

When you have someone depending on you financially, life insurance is a must. If you should pass away unexpectedly, your life insurance policy could provide a ready source of income for your dependents.

Named beneficiaries can use proceeds to cover daily living expenses, mortgage payments, outstanding debts, and college tuition. Life Insurance may also pay for funeral expenses and medical costs, not covered by your health insurance policy. One of the primary advantages of life insurance is that proceeds are transferred to loved ones completely income tax-free. As long as your named beneficiaries are living, proceeds will bypass probate courts. Avoid probate, save a lot of time and hassle.

There are several types of insurance, with many factors and benefits to consider. Determining which insurance will best meet your family’s needs is a worthy endeavor. It is beneficial to have a professional on your side to help you sort through your options. Here’s a broad overview of life insurance options...

Andrew Branch

In the event of premature death, term life insurance can be used to replace lost income. Term life is often favorable for younger families due to its simplicity and lower cost. Once premium payments are made, you are covered for a certain period, such as 10, 20, or 30 years. When the term is up, you stop paying payments, and coverage ends. Term life insurance only pays if you die within the term. The cost is lower for term life than other types of insurance, because it does not build cash value and it is only for a limited term.

Commonly used for wealth transfer and estate planning purposes, permanent insurance provides coverage as long as premiums are paid.

There are five main coverage categories:

  • Whole Life
  • Universal Life
  • Variable Life
  • Variable Universal Life
  • Index Life

Premium payments are invested in various stocks, bonds and mutual funds. Then, your cash account is credited based on the portfolio’s performance. You can make partial withdrawals and borrow against the cash value, free from taxes.

In addition to providing a death benefit to your beneficiaries, cash value life insurance offers a way for you to accumulate money inside the policy. The funds that accumulate in the policy may grow on a tax-advantaged basis and can also be used during your lifetime to help meet many financial needs. Permanent insurance can be very advantageous for funding education, starting a business, or bridging cash flow gaps. If loans are available, life insurance may save you filing the proceeds on your tax return. Any remaining death benefit can then be transferred to your beneficiaries free from income tax.

Life insurance can help offset market losses. That’s because life insurance complements other asset classes, such as stocks and bonds, helping to manage overall portfolio risk. The death benefit risk is:

  • Uncorrelated with other sectors of the investment marketplace, such as equities or bonds
  • Borne by the life insurance carrier, which will pay the death benefit in full at the event of death
  • Based solely on a death event, not a market event that can cause a downturn in value.

There are many factors to consider in determining the right amount of insurance coverage for your needs. You can start by calculating your current and future debt obligations, as well as your earnings from income and investments. Consider the goals you have for your family’s future. Do you wish to pay for your child’s college tuition? A vehicle? A wedding?

Click HERE see how much you would need to replace.

Life insurance doesn’t have to be an added cost. By reallocating a portion of your current investment portfolio, it’s possible to purchase a life insurance policy designed to help accumulate, protect, and transfer your wealth, without incurring an additional, hard dollar cost and delays.

Great! Insurance needs can change as you approach significant life events, such as marriage, divorce, the birth of a child, a new job, or retirement. Periodically review policy details, as rates and coverage can change. Ensure your life insurance coverage continues to meet your financial goals.

You can’t predict what the future holds. But, you can help ensure a brighter future for your loved ones. Having sufficient life insurance in place can help protect their dreams for the future—and give you the peace of mind to look ahead with confidence. 

Are your loved ones fully covered?

If you’d like to learn more about cost-effective ways to incorporate life insurance into your comprehensive wealth management strategy, give us a call today to schedule a meeting.

Together, we’ll assess your needs and concerns, discuss your options, and then decide on a practical solution that meets your budget.

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