Protecting your family against the financial consequences of your death should be part of your total financial plan. Although no one likes to think about dying, having life insurance in place provides considerable peace of mind knowing you have taken steps to secure your family's future should something unexpected happen to you. We are here to help!
When considering life insurance, we help you to answer the following questions:
- How much life insurance do you need?
- What type of life insurance should you buy?
- Should life insurance be part of your estate plan?
How much life insurance?
If others are dependent on your income, life insurance should be part of your financial strategy. There are many ways to calculate the amount of coverage you should consider that take inflation, debts, children, retirement plans and estimated investment returns into account.
If you have young children, dependents with special needs, large debts or other special considerations, you may want to be on the high end of this range (or above). For example, if you expect a child to attend a private college, the annual costs could be over $40,000. To cover those expenses, you may want to increase your coverage by some multiple of the annual cost to cover four years of college and to take potential inflation into account.
What type of policy is best for you?
The two basic types of life insurance policies are term and whole life or cash value. Term insurance is simple protection, payable on the death of the insured and is typically the least expensive of the two. Whole life or cash value policies provide death protection but also have a “cash build up” feature that acts somewhat like a tax-deferred savings account. The accumulated “cash value” can also be the source of low interest loans for the policyholder or be used for other investments.
When evaluating these types of policies, it's important to consider all the costs, the amount of death benefits and the history of the level of earnings on the “cash value” the insurance company has paid previously.
Should life insurance be part of your estate plan?
If you have young children, a child with special needs, are a business owner, or have significant assets, you will want to consider life insurance as part of your estate plan. Life insurance in an estate plan can be used to increase the value of your estate and help avoid taxes as well as provide other retirement benefits, disability or long-term care protection, and more.
To learn more or to help you incorporate life insurance into your current estate plan, contact us today to get started. If you don't have an estate plan yet, we have an entire team of United Wealth Trust & Investment professionals available to help you protect, grow, and preserve your hard-earned money. Contact us today for a no-cost, no-obligation consultation.