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Life Insurance, The Gift that Keeps on giving at the season of gift giving

Dec 16, 2011   //   by Ben Gerritsen   //   Mortgage News  //  Comments Off on Life Insurance, The Gift that Keeps on giving at the season of gift giving

If you are looking for a way to give you spouse and your children a gift of love that can’t be replaced, you may want to think of something that not many people do this time of year.

Over the past few decades, the percentage / ratio of adults that have life insurance has dropped from over 75% to now approximately 50% of all adults have life insurance.  This past year, a recent study shows that a nationwide poll shows this to be the current national statistic. That means half of all people that are walking around think they have enough money in life and don’t need life insurance (then you have estate planning reasons and needs), some are either not worried about it now and don’t believe they need to have anything now and they’ll wait til later to get life insurance.  Some are totally uninsurable becuase of some medical reason, they waited too long to apply.  some people are eligible, but the cost of the premium is higher than what their budget allows.

This 50% of adults that do not have life insurance is an astounding figure of the number of spouses and childrent that are going to have a financial catastrophe that is a ticking time bomb waiting to happen.

Now the percentage of those that do have life insurance, is it the correct dollar amount?

You may be saying to yourself, but I already have life insurance for myself and I’m fine.

Do you have the correct type of life insurance?  You may be paying for whole life insurance and your budget should be having you pay for term life insurance as a younger person.

Some people need to have universal life insurance.

Each person is in a different position in life and has different financial needs as well as survivor needs.

Are you paying too much when you could be paying less?

Do you need more coverage than what you currently have?
When asked to many people how much coverage they want, many people guess the amount and say a figure of either 100,000 250,000 or 500,000.  What they fail to do is to calculate what their survivors needs are based on costs if they were to do and factor in the expenses for each individual for the long term. The need to pay off the house (mortgage) is only one aspect, but you need to calculate items such as: income for the spouse & kids for the number of years that is needed, cost of college for each child (and possibly graduate school costs), weddings for girls, missions for children (certain faith’s), funeral expenses & associated costs of dying (health insurance deductibles assuming you will have health insurance when you pass away).

This summer and fall, I have met with a family on a few occasions to assist them. In finding out their situation,  another insurance agent had recently sold the husband, who is mentally challenged an insurance policy that does not help them at all if he were to die.  He didn’t take into consideration the needs of the spouse, the debt they have or how to come up with a way that they could afford the premiums.  If he would have gone over their monthly budget in detail, there is a way to pay for the type of policy with the correct amount of coverage.  Instead, this insurance agent went for the easy commmission. The husband being mentally handicapped was asked to sign papers for a small $5,000 whole life policy and was told this would take care of his needs and there is no reason to worry.  This man would nod his head to anything he was told or asked to.  The monthly cost was the same as if he was to have had the coverage needed to pay the house off if he were to pass away and be debt free for the wife who has no way to pay if off her self.  

There are many insurance agents that are unscrupulous and are looking for the easy sale for the quickest commission.  There are companies that have captured agents that require their agents to meet a quota and production level.  They are forced to make sales or these agents lose their bonuses and in some cases they can lose their base salary.

Wow, now that’s scary to think that there are insurance agents (and some people meet with these agents or even you may be working with agent) that does not have your absolute best interest of your spouse, children or youself when the time does come that each of you passes on from this life.  Now, not all insurance agents are like this.  There are many in the industry that are honest and ethical.  Especially those that are members of NAIFA.  The ones that I would typically suggest to be careful is from the captured agents.  They only write for one insurance company.  I have friends that are captured agents that are great, they are honest and ethical.  But as a whole, there are agents that are driven by their company and their management to produce sales, no matter what.  And they don’t care if they have the right product for the client.  This is a problem that trickles down to families being the ones that are hurt.

How about life insurance for your spouse?

Now, just what if your spouse where to be diagnosed with cancer and is were to pass away from the dreaded disease?  I happen to know a couple close friends and families that this has happened to.  You can’t rule this mean disease out from happening to either you or your spouse or to someone in your family (even a child).  What about anoy other form of medical complication(s), dying during child birth or any other way.  How about if there is a freak car accident and your spouse and possibly your children were to die.

These are situations and examples that doesn’t hppen to many couples, but does it happen? Yes, it has happened to some people and it will continue to happen to others.

So what if your spouse doesn’t have life insurance and this happens?  Do you have suffecient funds for not only the costs associated with any medical bills that you are left with, but also funeral costs, debts and child care expenses for a prolonged period of time, tutoring for homework, nanny expenses when needed (which add’s up fast).

Many families do not have life insurance on the spouse. And those that do have life insurance on the non-working spouse are way under-insured.  They have not factored in the long term cost of a full time mom or someone.

How about life insurance for your children?

Are your childrent insured?  If any of your children were to die as a child or in their teenage years, can you afford both the excess medical costs from an accident (deductibles you would be faced with), along with funeral expenses.  This is a real thing to plan for in case it happens.  There are families that don’t plan and are left wondering how to plan for the financial costs associated with a tragic accident.  The event of a child dying can force some families into a financial hardship, both the medical bills and also the funeral costs.

There are life insurance companies that we represent that offer child riders to cover every child in case of death.  The cost for a child rider is so little that if you don’t need it, it’s not a big deal.  But if you were to need a life insurance company to pay out on the death of a child or in some cases multiple children at the same time, it’s the difference between having a financial hardship that could last for a long time from a tragedy and not having an unexpected death to not be a financial hardship but rather only being only an emotional hardship.

The difference and the cost is so minimal in the cost of the plan, yet the difference in families that have it that have relied on them versus the families that haven’t had them and needed a child rider life insurance is so drastic that it’s hard to convey unless you have dealt with these families and seen the difference from first hand experience.

So what if you have enough money in life and you don’t need life insurance?

How about protecting / preserving your wealth

There are books that have been written to discuss this topic rather than one or two paragraphs.

The book that I would suggest reading on this subject is titled “Die rich & Tax Free”

The nutshell of this book to relate to each reader is: To preserve the funds and wealth that you or someone else has spend their life trying to atttain can be preserved for generations, protect against taxation of funds from estate (death tax).  You can protect against children or multiple children fighting over money.  There are ways to preserve funds for each situation that arises in life by using life insurance as a safety net that not many people realize is possible.

You can guarantee income for life for your spouse or for children.  You can use it for paying the taxes on a large estate that will prevent the liquidation and premature sale of assets so the assets stay in the family or business upon death.

This is a topic that is much broader than this article will allow for.  But it is a topic that everyone needs to prepare for.  Using an attorney that specializes in estate planning is also critical to this as well.

Correct Type & Coverage for the Whole Family

Making sure that not only you have the correct type and amount of life insurance, but also your whole family is insured properly is so critical.

I encourage each person that reads this as well as to each person and family that you have an influence over and speak with to ensure that they have the proper coverage.

As a meber of NAIFA, National Association of Insurance & Financial Advisors, we have a goal to help each person and family be properly insured.  Writing a policy is not just writing up the information on the applicant, but to go over their needs and to get to know the needs of the spouse and childrent if anyone were to die unexpectedly.

The wonderful thing that both myself and my wife Jennifer have as being independent life insurance agents is that we can write for multiple companies, not just for one company that forces us to meet a quota and have traps that in turn are unfavorable for families.  We have the best interest of each client and family.  As we get to know each persons situation, we figure out with type of life insurance and/or product(s) are best suited for their needs and also which company / carrier to have based on not only the price, but also which features / riders and clauses for that person / family.

There are many good insurance companies.  But each person has a different need. Some people smoke, some people are in great health and some people have medical challenges, whether it’s diabetes, high blood pressure, heart issues, sleep apnea and others.  Some take daily medications.  Each of these reasons is a reason to use a lfie insurance agent that is indepenent (a broker for you).  They find the company that based on your situation will get the right policy and the right carrier for you.

At this time of year, I would like to encourage each person to look at how to protect yourself, your spouse, your family and your wealth from being in danger of a financial hardship.  This is the time of year to give the gift that is deserved more than any other monetary gift can be given in the season of giving.

My wife, Jennifer and I do not charge up front costs to our clients to review thier current situation.

Our web site is: www.insuremyliferight.com

You can reach Ben Gerritsen at: 

1-801-814-2364

You can reach Jennifer Gerritsen at: 

1-801-675-8085

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