Life Insurance, Protecting You and Your Family

Life Insurance,

Protecting You and Your Family

February 15, 2016

For 7 years now, my wife, Julie and I have been helping people with their overall financial wellness. Now, we have taken it one step further by helping people understand the importance of Life Insurance.

Life insurance. We sure do have a love hate relationship with this topic, don’t we? How much to get, what kind to get, and who to get it from seems to be the typical questions that most people ask.

Well, let’s ask a question that most people don’t ask. What is life insurance for? There are many applications life insurance is used for these days, but to put it simply, life insurance is for replacing lost income due to death. Now that we have established that, the other questions seem to answer themselves. So let’s start with the first question…

How much to get: We believe the way Dave Ramsey thinks. You should have about 10 to 12 times your annual income in life insurance. The reason why, is this. If you or your spouse were to pass away, the survivor can take the face value of the policy and invest it to replace any lost income, as the example below shows.

Annual income of $50,000 x 10 = $500,000 in Life Insurance. 

$500,000 x 10% rate of return = $50,000.

Now we all know that the stock market goes up and down like a roller-coaster. So even if the rate of return for a particular year was less, let’s say 6%, you’ll still be making $30,000 that year. Something is better than nothing.

What kind to get: Again, following Dave’s philosophy, the Only kind of life insurance you should buy is Term Insurance. Why? Simple. It costs far less than any type of Cash Value or Whole Life policies on the market today. And here’s the biggest reason… any amount of saving built up in those kind of policies is kept by the insurance company when you pass away. How is that right? In fact, there are only 3 ways you can get money from a cash value or whole life policy. 1) Live to 100 years old. 2) Cancel the policy. 3) Take a loan out on it, which you will have to pay back. So Term Life Insurance is definitely the way to go.

Who to get it from: Now I'm not trying to sell you on the life insurance we sell. There are hundreds of companies out there to choose from. We can have a sit down chat about what we offer over coffee, but for the sole purpose of this blog, I just want to stress the importance of getting the right policy, with the right coverage for you and your family. So shop around. Don't just go to one company and buy what they have, the next company you check out may be a better fit for you.  

Folks, life insurance is a must if you have a family that depends on you for financial stability. Protecting you and your family from the unforeseeable future is just another way you tell them “I Love You”.