Life Insurance…. What’s in it For Me?
Why would someone consider buying life insurance and what kind is the best policy for their dollar?
Life insurance is one of the foundations of managing your personal finance, something every person should consider an absolute necessity! But somehow, in spite of this fact there is still a large amount of confusion, skepticism and negativity for most people when they consider buying life insurance.
This could be because of life insurance’s complexity. There may also be trepidation because of the way some insurance agents go about presenting the idea of life insurance. Many people are just uncomfortable consisdering the topic of their own mortality. In any case, with adequate information, it is possible to simplify the the subject to a degree that anyone can make the right choice for themselve and their family. That is what we here at Liveoak Agency work to do every day, give our customers the tools and information they need to make the best choices for them and the conditions that surround them at that point in time.
Here a a few things we often discuss with people who are considering life insurance:
1. If there is anyone in your life who relies on you for financial support to any degree, you should have a life insurance policy. Spouses or parents of dependent children are the obvious individuals who can’t do without it, but it could be required even if you are an ex-spouse, life partner, a even if you are a child of dependent parents. Other situations where it could be advisable are:
-A sibling of a dependent adult, employees or an employer or a business partner.
-Someone who is financially settled and retired or financially independent with no person who would be impacted financially if they were to pass would not need life insurance, but even they might still consider using life insurance as a strategic financial tool, in the right circumstance.
2. It is important to realize that life insurance is not a method of attributing a monetary value to your life. Life Insurance is a way to help compensate for the unavoidable financial consequences that will inevitably accompany the loss of life. It is a viable strategy to help those left behind cover the final expenses, any outstanding debts such as credit cards or mortgages, and can even be designed to cover planned educational expenses or even moderate the effect of lost income in a household. A very big factor to consider is that following an unexpected death, this coverage will mediate almost any financial burdens when surviving family members struggling with the loss of a family member.
3. Life insurance should be considered a risk management tool. It is not appropriate to consider it an investment. There are some life insurance policies that have an investment feature that provide some degree of tax privilege, but it is a rare situation where insurance would be considered an optimal investment. Better and more efficient tools for financial tasks can be constructed with a financial advisor. Someone might consider a policy like that if they have already have maximum emergency cash reserves, have no non-mortgage debt, own a maxed out 401(k) or Roth IRA, have complete education savings plans in place and planned out financial solutions for any significantly large purchases they expect to make over the next 10 years. Since most people rarely find themselves prepared to this extent, life insurance policies containing an investment component are rarely worth considering.
There are a number of very specific and individualized aspects of planning and choosing life insurance policies. We are prepared to help you discuss those details and make sure you make the best decision for yourself and your family. Most of us don’t really like discussing life insurance as it relates to our death. However, having an honest discussion on planning for the details following a death is actually a positive experience after the fact. Purchasing the right life insurance policy is a very important part of anyone’s long-term, comprehensive financial plan.
Call us to schedule a time to let us help you with these important life decisions now!