Life Planning Checklist from Estate in One Place

Why do I need life insurance? 

If you don’t understand life insurance, you’re not alone.

A lot of us have a vague idea that we might need it. But it’s not a strong conviction. 

And it’s not exactly cheap. 

Life Planning Checklist is all about asking the experts those nagging questions. The ones we feel we should understand better than we do. 

I’ve asked a trusted colleague, Michael Blumenfeld of Start Your Path Today, to cover this topic for us. 

Thank you, Andy! 

You’re right that my clients come to me with a lot of questions. I love educating them on their best options!

There are three primary reasons to get life insurance: 

  1. To protect your family 
  2. To protect your own insurability
  3. To leave a financial legacy behind 

The first reason is the simplest to explain. If your household depends on your income, life insurance will help replace that income if you die suddenly.

In most cases, families with young children are the best candidates for this need. 

If mom and dad are both working, and one of them dies, would the remaining spouse be able to afford the rent or mortgage payment? Would the family be able to keep up with bills, pay for childcare and generally maintain their current lifestyle? 

How would your budget be affected if half the income — or all of it — disappeared? 

Life insurance protects the livelihood of those who depend on you. 

Protecting your insurability is the second reason to get life insurance. 

A lot of people say, “I’m healthy; I don’t need life insurance. I’ll get it later because I don’t want to spend that money every month.”

And I get that. But what happens if, in a year or two, you’re diagnosed with cancer or suffer a life-altering injury? 

All of a sudden, you can’t get insurance. And that’s when you critically need it. 

Sometimes a minor health setback can make your insurance cost 25 times more. Chronic conditions like diabetes or high blood pressure can dramatically affect your rates.

More commonly: the older you get, the more expensive life insurance will be. 

So don’t wait! While you’re healthy, lock in those lower insurance costs. 

Finally, life insurance is a way to leave something for your loved ones. 

Let’s say your kids are grown, and your savings account isn’t as full as you had hoped. Taking out a life insurance policy is an alternative way to leave something behind for your children.

Plus, life insurance also is a tax-favorable asset, giving it an extra benefit. I’ll give you an example. 

Say you’re committed to help your grandkids go to college one day. You plan to put away $50 or $75 a month for each grandchild, starting when they’re small. 

Contributing that money to an insurance policy can be one of the smartest things you do. It gives them insurability, AND all of that money grows tax-free.

So how do you get life insurance?

Tip 1: Finding the best policy

You’ll want to take out a policy with a reliable company. If you’re not sure, check the company’s COMDEX rating, which is like a corporate credit score. It should be 85 or higher. 

The value of your policy should be 10 to 15 times your current annual income. That will allow your family to invest and live off that money. If your kids are older, you might need less of a premium. 

Tip 2: Look for convertibility and living benefits

Most families will invest in term insurance. This means the policy will expire — usually right around the time the kids are all grown up and replacing your income is less urgent. 

If possible, look for a term policy that can convert into a permanent policy later on when you have more funds to contribute to it. There aren’t many policies that offer this benefit, but they do exist. 

More importantly, look for a policy with living benefits. This allows you to use your funds before you die to cover unexpected health events like a disabling injury or a terminal illness. 

Tip 3: Be honest about your medical history

The process of taking out a life insurance policy includes a detailed questionnaire about your medical history. 

Make sure your answers are forthright and thorough. 

It’s scary how many medical records are available to underwriters (those are the people who will decide if your application is worth the company’s risk). The minute they find out you lied, you’re done. You won’t qualify. 

When an underwriter sees an application that matches the medical records, they’re going to reach for you, because it’s just human nature. 

So be honest. It’s a benefit to you.

Once you have life insurance, make sure you store the policy information in your Estate in One Place account!

To make life insurance part of your holistic financial planning, give me a call: 262-894-6040. 

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