Millenials Are Not Carrying Enough Life Insurance

Forbes recently published an article reporting that only 10% of Millenials have enough life insurance in place to cover self-reported needs should they die. That is a scary statistic. Not carrying the proper life insurance puts your family members at financial risk, in the event of your death.

The article reports:

  1. Millenials report a 78% shortfall in life insurance coverage.

  2. By contrast, Gen Xers report a 48% coverage shortfall.

  3. Baby Boomers have a 37% shortfall.

In terms of purchasing life insurance, the article says, "Get enough insurance to replace the lost income of the deceased, so the surviving spouse can carry on with paying the mortgage and saving for retirement."

The American Institute of CPAs has a life insurance needs calculator (link here) to help you determine how much you really need.

Check out the full article here:

And, if you have questions about your life insurance policy, or getting a quote, call your agent.

Why You Should Consider Life Insurance If You Own A Business

By: William Forbes

We have a quote printed on the wall of our office from financial guru, Suze Orman, which says, "If a child, a spouse, a life partner, or a parent depends on you and your income, you need life insurance." This quote sums up pretty perfectly why you would need life insurance on a personal level. But, what about the people who depend on you in a business capacity?

Are you the owner of a business, or are you a partner in a business? If yes, then you have people who depend on you for the success of the business and their financial livelihood.

When a key member of a business passes, it can mean a few things for his/her family, as well as for the other employees: the sale of the business, the retention of the business, or liquidation of the business. The point here is to avoid liquidation, as it often results in a below market value.

There are several types of life insurance policies that can be beneficial for business use and to help prevent a company's liquidation upon the passing of an owner or key employee:

  1. Buy and Sell Policy. In a sole proprietorship, this policy is designed to allow competent associates of the deceased to purchase the business, using life insurance for funding. This means that if anything ever happened to you as the owner, your associates would have the proper funding needed to purchase the business and keep it running. Or, alternatively, your family would have the funds needed to keep the company running through a proper sale process.
  2. Cross Purchase Plan. In a partnership, each partner would purchase a buy and sell agreement on the others, naming himself as the beneficiary and the others as insureds. This would give each partner the proper funding to purchase a set share of the deceased partner's interest.
  3. Key Person. Most often used by corporations, here a business owner would take a life insurance policy out on a key employee (think CEO or other top executive). If the key employee ever died, the company would be the beneficiary of the policy, which would provide funding while a replacement was being trained.

These are just a few examples of using a life insurance policy to protect your business. For more information on these and other options, talk to our agency. Life insurance can provide needed security for more than just your immediate family members.

Don't Ignore Insurance in your Financial Planning

By: William Forbes

October is National Financial Planning Month – a time to be sure your family finances are organized and you have a plan in place to meet your financial goals. Although it is probably not the first thing that comes to mind, insurance is an important part of your financial plan. The very reason for insurance is to transfer your risk of financial liability to an insurer. To put it more plainly, insurance protects you and your family from a financial loss due to the loss of life or property.

Just as you might sit down with a financial advisor annually, or outline your family budget and savings, you should evaluate your insurance policy each year as part of your financial planning (Click to Tweet!). Below are some items to bear in mind when it comes to considering whether your insurance policy is still an accurate reflection of your needs.

1.       Have you moved or made any significant changes to your home?

Beyond just meeting the minimum requirement of notifying your insurance agent of a change of address, it’s important to discuss with your agent what a new home could mean for your overall financial picture. Are you taking a step up in terms of the mortgage and/or size of the home? Are you the primary earner for your household? Are the coverage amounts still appropriate for the new home, or for your current home after a structural change has been made? In looking at your finances, are the deductibles still appropriate?

The answers to these questions can dictate important financial decisions for you and your family. They also help to bring into focus your full financial picture, and can lead to other important financial decisions. Take, for example, the first two questions: (1) Are you taking a step up in terms of the mortgage? (2) Are you the primary earner for your household? If you’ve answered yes to both of these, then it may be important for you to look at your life-insurance coverages, in addition to your homeowner’s policy.

It’s not just about reporting new purchases and changes in your living arrangements to your agent to be sure they are covered (though that's certainly part of it); it’s also critical to understand what these changes mean to you and your family’s overall financial health.

2.       Have you had a major life event – marriage, a new child, health changes?

If you’ve recently had a major life event, it’s probably a good time to see if you have the right insurance policies in place for those who depend on you (Click to Tweet!). There are many different life-insurance products on the market, which address a variety of financial needs and time horizons.

Maybe just as important as life insurance, is disability insurance. While most Americans depend on company-sponsored disability programs for issues that keep someone from working, often these programs do not sufficiently cover income loss. Particularly in a one-income family, replacing the breadwinner’s earnings is crucial to the family’s financial well being.

Your agent can walk you through the different products out there and which would be most affordable and beneficial for your family.

3.       Are you planning any large purchases in the coming year – a car, boat, art?

This question is similar in nature to item number one. First, it’s important to discuss these types of purchases to be sure you have the correct insurance products and coverages in place. But, it’s also important to understand how large purchases affect your entire financial picture. As your lifestyle changes, it’s essential to have the proper insurance in place to protect you and your family, and to be sure your loved ones can maintain the lifestyle in the unfortunate event that something happens to you.

4.       Have you had any business changes?

Are you changing your job or company? Are you planning to be self-employed? Are you nearing retirement? These types of business-related changes not only affect your finances, but also affect the types of insurance you should carry. Whether you are getting insurance through a company, or are purchasing a policy individually, you should understand the policy’s coverages and limits. There are so many things to consider in terms of insurance, when it comes to a change of employment. I couldn’t possibly cover everything here. However, I wanted to include this item as a reminder that if you will be making career changes, set a meeting with your agent to discuss your plans and how to address your insurance needs smartly. (Click to Tweet!)

5.       Do you need to consider long-term health care for yourself or a loved one?

Long-term health care policies pay daily benefits to help offset the cost of nursing and home care for certain illnesses not normally covered by health insurance and Medicare.  It’s hard to think about, but for my insureds over the age of 50 (or those with an elderly relative), I recommend understanding what this type of policy can offer you and your family. A long-term health policy could provide money to help pay for skilled care of a loved one, including: (1) respite care, (2) home care, and (3) adult day care. Keeping up with the costs of nursing care can be financially crippling, but there are insurance products that can help.

6.       Are you planning to travel more?

If you are planning on jet setting, whether you have dependents or not, talk to your agent about what insurance products could be helpful in your travels. From travel health insurance to cover injuries or illness while you are on the road, to rental car coverage, to property insurance to cover your valuables, there are lots of options your agent can offer you. All of these options can impact your finances, should you experience a loss while traveling. 

The Honest Talk About Life Insurance

By: William Forbes

If a child, a spouse, a life partner, or a parent depends on you and your income, you need life insurance.
— Suze Orman

September is Life Insurance Awareness Month, and in my opinion it is an important topic. There are so many articles out there that give guidance on the best products and how you know if you need them. I'd like to cut through the confusion and noise by taking a firm stance in today's post. Simply put, if you have any dependents at all, you need life insurance. And, it's best to purchase a policy when you are younger to lock in a rate.

I'm speaking to readers of this blog who are between the ages of 30 and 50. During that age period, people usually have the most dependents - younger children, a spouse, a partner, etc. This is the sweet spot for life insurance, because this is the time your loved ones would be most affected by your death. It's not easy to think about, but children, spouses, and partners can be significantly affected by the costs and budgetary changes that come with losing a caregiver. Life insurance isn't about protecting yourself, it's about protecting your family. A good policy will help your family to maintain their lifestyle if you are no longer with them.

There are many things to discuss with your insurance agent when it comes to purchasing the right plan for your family. But, I suggest purchasing a policy as early as you can, and locking in a manageable rate on that policy. For example, a term policy is probably a good place to start if you've never looked at life products before. With a term policy you can set the time period for which you want coverage, usually 20 - 30 years, and these products are relatively inexpensive. A term policy will give you the comfort of knowing that your family is taken care of during the most crucial years - when children are youngest and your family is still likely paying off larger purchases, such as a house, car, or student loans.

Life insurance is truly an important purchase for the people you love. If you have any questions about life insurance, give us a call and talk it through with an agent.

Insurance Concept of the Week: Term Insurance

Each week we will post and define an industry term or concept for our readers.

Because September is Life Insurance Awareness Month, we thought we'd participate with a related Concept-of-the-Week post.

Term insurance provides life insurance protection for a designated number of years - anywhere from one to thirty. It accumulates no cash values and expires with no value at the end of the term; however, it is less costly than permanent forms of insurance. As a benefit, term insurance can be written as renewable or convertible - meaning the policy can be renewed or converted (to permanent insurance) without proof of insurability.

Please let us know how we may help with your life-insurance questions.