Life Insurance - Additional Information and Quoting Tool
According to a study by LIMRA and the Society of Actuaries1:
* 58 Million U.S. households (44 percent) believe they do not have enough life insurance, and
* 44% of Americans own no life insurance.
Why is this? The reason that clients give, or at least think about, is, "Am I getting my money's worth?"
There are many different insurance products out there. Some are more suited to an individual's need than others. The key is to work with a professional who, based on your income, assets, and age, can best develop an insurance strategy that fits within your budget.
And remember, not all life insurance just pays a death benefit. New type policies may also allow acceleration of the death benefit for qualified terminal, chronic (think long-term care needs), and critical (think heart attack) etc. Some life insurance policies even have riders that pay some of the premiums in case of unemployment (additional costs may apply). The variety of options available today is much different, and better, than just a few years ago.
How Much Life Insurance Does A Person Really Need?
Ask Yourself These 4 Questions:
1) If you were to die today, how much would your spouse, partner, or significant other need IMMEDIATELY for expenses (funeral, credit card debt, etc.)?
2) How much would your spouse, partner, or significant other need deposited into their checking account on a MONTHLY basis to maintain the same lifestyle?
3) How LONG would your spouse, partner, or significant other need this monthly income?
4) At the end of this period, is there an amount that you would want paid in a LUMP SUM (in case your spouse, partner, or significant other was still alive or for additional, unforseen expenses)?
By answering those four questions, that's the EXACT amount of life insurance you will want to consider.
How Much Does That Amount Of Life Insurance Cost?
It depends on your age, sex, smoking status, general health, and other factors including the type of policy (either term or permanent coverage). But life insurance premiums cost "pennies on the dollar" providing significant leverage. Plus, the life insurance death benefits are paid to your beneficiaries generally income tax-free, when properly structured.
Reason to Buy Life Insurance
NEVER buy life insurance because a sales representative told you it was "tax deductible". Some businesses may be able to deduct the insurance premiums as a business expense but having owned a restaurant at one time, I learned that "cash flow" is much more important than being "tax deducible".
Buy life insurance because you love someone and you want to help make sure that they are taken care of if you are not around.
Here's a story that highlights the point: One day a group of CEO's were in a conference room. The moderator said that each CEO was to take a few minutes to think about what qualities and traits make them better than anyone else in the room. After they gathered their thoughts, they were to present this to the rest of the CEO's. The CEO's started to squim. Although each was very successful in their own right, none of them were comfortable telling the audience what made them so great.
The moderator, recognizing the difficulty in getting the CEO's to speak about themselves changed the task a bit: He told them that rather talk about themselves, they were to tell the group what traits makes their spouse, partner, signifcant other or children better than everyone else.
This was a task the CEO's found easy. In fact, some kept talking until they were told to allow other CEO's to speak.
Of course, we never feel comfortable telling others how great we are, but because of the love we have for our family, we feel very comfortable telling others how lucky we are to have them.
Life insurance protects that love.
There are many types of life insurance broadly broken down between Term and Permanent.
Since Term insurance is easier to understand -- you pay a premium and receive a death benefit guaranteed for a certain period of time, below is a no-cost term quote engine. With just a few inputs, you can immediately see the pricing of the top term carriers in the industry -- and you can even apply for coverage! Give it a try.
1LIMRA & The Society of Actuaries, Guaranteed Uncertainty - Socioeconomic Influences on Product Development and Distribution in the Life Insurance Industry, 2011, pg. 7, 27.