Life insurance is a versatile financial tool that can beused to solve a wide variety of planning problems. Policies are utilized everyday to aid in small business planning, estate planning, tax-free retirement, mortgageprotection, and a host of other scenarios.
All life insurance policies come with a death benefit that pays a large lump sum of tax-free money to an assigned beneficiary if the insured party is to pass away. Modern policies even include Living Benefits features that allow for the insured to access their death benefit while they are still alive if they suffer a major illness or injury.
This makes life insurance an attractive option for breadwinners in a family who are providing for their spouses and/or children financially – if something unexpected were to happen to them, they want to be sure that their family’s financial picture is kept intact. This can be easily and affordably done by putting life insurance policies in place, usually on one or both parents.
Rick, 33, & Cathy, 31, are married with two children, ages 2 & 4.
Rick makes $80,000/year as a railroad worker, and Cathy makes $40,000/year as a kindergarten teacher. They have a $2000/month mortgage on a home that they owe $300,000 on, as well as $25,000 in combined student loan, automobile, and credit card debt. They have around $20,000 in an emergency fund and contribute regularly to their respective retirement funds through work.
Rick spends a lot of time traveling for work, and in addition to her job as a teacher, Cathy does the majority of the work when it comes to grocery shopping, running the kids to and from daycare, meal preparation, and keeping the family’s day-to-day running smoothly.
Without life insurance in place, if something were to happen to Rick, the family’s income would be cut by 66% overnight. Even with the benefit of a sizable emergency fund, Cathy would struggle mightily to keep up with the mortgage payment, as well as the utility bills and the cost of the kids’daycare.
On the other hand, if Cathy were gone, the family’s income would drop by 33%, but Rick would face the challenge of either finding a new role at work or hiring help to do all of the work that Cathy was doing on adaily basis to keep the household running. This is where life insurance for families can make all of the difference in the world.
Thankfully, they put life insurance policies in place when they had their first child.
Their agent helped walk them through a simple needs analysis that took their incomes, debt, financial goals, and budget into account and produced a recommended amount for each of them to be insured with. As a result, Rick has a $750,000 policy and Cathy’s is for $500,000.
Their policies cost a total of $150/mo. Rick and Cathy see this as a small price to pay for the peace of mind that if anything unexpected happens to either of them, the surviving spouse and their two children will be taken care of financially. Cathy would use the $750,000 to pay off their home and outstanding debts, using the rest for a nest egg to provide for the family and to start a college fund for the kids. Rick would use the $500,000 to payoff the home and debts and hire in help to keep the household running in Cathy’s absence.
Living Benefits features on each of their policies adds additional protection – for example, if Rick were to suffer a heart attack, stroke, or cancer diagnosis, he can accelerate a portion of his death benefit to get a large sum of money in his hands while he’s still alive. That money provides him the ability to take as much time off work as he needs, pay for the best medical treatment available, and keep the family’s financial picture intact and bills paid while he is recovering.
The application process to get life insurance with Living Benefits is no different than a death benefit only policy...but you get so much more. Alliance Group can connect you with our network of experts who can help you explore the options for you and your family. Reach out today – we’re here to help.Get Started!
If you earn an income and you have people that depend on that income to get by, you need life insurance.
It’s the simplest and most cost-effective way to ensure the financial well being of those that you love most.
There are two kinds of life insurance – term and permanent. Term coverage is temporary and typically lasts over a period of 10, 20, or 30 years. This is an attractive option for families because it is the most affordable life insurance for families. Permanent coverage is designed to last as long as the insured lives, even if that is past age 100. These policies are going to cost more, but come with the ability to generate and accumulate cash value over time that can be accessed later in life.
Alliance Group’s national network of life insurance professionals can help you answer any questions about your life insurance coverage, including how much life insurance your family should be covered with and what types of life insurance you should consider.Click below and we can help you secure the financial futureof the people you care about most.