You have received many wonderful answers to your question already. However because of the business of life insurance it is very difficult to give you a straight answer. Most of your answers confront the need for term life insurance, which can give you a large amount of insurance for very little monthly premiums. However those premiums increase over time so in 20 or 30 years you may not be able to continue to afford those monthly premiums. I prefer whole life insurance because it is a set premium based on your age and current health conditions(if you have any). Whole life also builds cash value that you will be able to use in several ways if you need it.
The current average cost of a funeral is $15,000, but no one ever plans to pass tomorrow, more than likely you will pass far in the future. So with inflation the average cost of a funeral in 20 years is $30,000.
During our appointment we will do a needs analysis as well, to ensure there are no gaps in your coverage and that every possibility is covered while staying in your budget.
I think the most efficient way to determine how much Life Insurance is needed is by conducting a thorough Needs Analysis. After conducting the analysis, if the monthly premium is not within budget, then the alternative would be to purchase what you can you can afford. A little bit of something is better than a whole lot of nothing.
Buy term, invest the difference, plain and simple. It does depend on what your annual salary is now, generally 5 times the amount of your current annual income to. A financial needs analysis can greatly help you decide.
That completely depends on what the person needs. Do you want to pay for college for kids? Pay off a mortgage? Who and WHAT are you providing for in the event of your death? Most business owners that I work with don't think about Life insurance until they are in their late 40's or 50's and at that point there may be some pre existing 'health conditions' that can make a Life insurance policy more expensive. Life insurance is a great tool for financial planning. I personally have 3 policy's. 2 term Life and one permanent policy. Important to at least LOOK at the options...especially if you have a family or are a business owner.
Business from London, ON
Answered on Apr 19th, 2018
As some have mentioned here, first and foremost you need to do a proper Financial Needs Analysis using the Dime Method ( Debt, Income replacement, Mortgage and Children's education). Keeping these factors in mind and there may be others, you will then be able to assess the proper needs and then coverage for the client. I use our full financial needs analysis program which is complimentary to all of our clients based on their needs to show them precisely how much coverage they require based on their answers and input. The product to best serve in every situation is always Term Life insurance. Each element has its own time line or term. Along with this we educate our clients with the "Theory Of Decreasing Responsibility". We believe and teach our clients how to become self-insured. Have high value, low cost term life insurance when cash and assets are low but responsibilities are high while growing money, assets and net worth so later when responsibilities are low and net worth has met or exceeded the earlier years and now you are financially independent. This is financial planning 101 and answers the concerns of dying too soon or outliving your money. The only need for whole life insurance is so that the company and the agent get paid for the whole of your life. Want to know more direct message me here or at [email address]
Business from Orchard Park, NY
Answered on Apr 19th, 2018
Great answers. As a Financial Planner, I believe it is necessary to take a look at the entire financial picture in order to determine what is the correct amount. If budget is an issue, minimum amount = sufficient to pay off all debts (house, credit card, auto and any personal debt) OR if that cost is too great - whatever is affordable then begin the process of creating a budget and getting finances in order. Some companies offer employer paid group life, but, you should not count on that in your long term plan. BTW - if someone is single and doesn't share debt with anyone else - not a fan of purchasing life insurance unless you need another vehicle to save tax free.
Business from Vancouver, WA
Answered on Apr 19th, 2018
I really like the Dave Ramsey approach. Purchase a term life insurance policy for a low monthly premium and invest the money you would have spent on a whole, universal, or variable life insurance policy. You will make a whole lot more on the interest from your own investment than one of these policies will ever pay out. As far as the amount of term life, we always recommend 10-12 times your annual income.
Each individuals situation is different. Assessments of individual clients should be made of the clients health, age, life style, and finances. After the assessment is completed the agent can then put together a customized plan of coverage to meet their particular need. The following factors are to be considered when purchasing life insurance.
The average funeral these days cost between 7,000 - 10,000 dollars, (https://www.parting.com/blog/f...). If the client has a mortgage, coverage to pay off the mortgage in the event of an untimely death. Income for the family if the insured is the bread winner or contributes income to sustain the family - especially where there are children under age 18 or disabled persons in the household; outstanding debit is another factor to be considered when purchasing life insurance.
Another important factor is how much can one afford to pay comfortably for coverage. In some cases a client may only be able to afford burial coverage, therefore an agent has to provide options that are in the best interest of the client in order for them to make a better informed decision to meet their needs. A good agent will also do a review at minimum annually to reassess their clients particular situation as it pertains to need changes, giving the client opportunity to explore and adjust coverage options.
The only way to find out what you really need is to sit down with someone in that field let them ask you question hopefully they know all the right question if they are listing to you, you should be covered in the right way Our job as insurance agents is to listen, Assess, figure out a solution with your client , agree, move forward, follow up make them confident on their decision that’s how much you need
Critical issue is this, insurance companies are severely limiting ability to convert term insurance to a decent product except maybe a couple to a few years. Adverse selection they claim. Level premium term anesthetizes client to as time goes on, an artificially low premium until too late. Client in poorer health and nothing to convert to. Term insurance used to have an expectancy of around 5% which means that if client paid premiums 5% of the time it paid a death claim. Now that figure is less than 1%. Why do you think term is 1/10 th the price of a couple decades ago? Insurance companies are the House and odds are 99 to 1. Companies are developing permanent index products that initially charge about a 30 year term rate and have those guarantees BUT client doesn't just increases premium later rather than having to "convert".
Answers (1-10)
You have received many wonderful answers to your question already. However because of the business of life insurance it is very difficult to give you a straight answer. Most of your answers confront the need for term life insurance, which can give you a large amount of insurance for very little monthly premiums. However those premiums increase over time so in 20 or 30 years you may not be able to continue to afford those monthly premiums. I prefer whole life insurance because it is a set premium based on your age and current health conditions(if you have any). Whole life also builds cash value that you will be able to use in several ways if you need it.
The current average cost of a funeral is $15,000, but no one ever plans to pass tomorrow, more than likely you will pass far in the future. So with inflation the average cost of a funeral in 20 years is $30,000.
During our appointment we will do a needs analysis as well, to ensure there are no gaps in your coverage and that every possibility is covered while staying in your budget.
I think the most efficient way to determine how much Life Insurance is needed is by conducting a thorough Needs Analysis. After conducting the analysis, if the monthly premium is not within budget, then the alternative would be to purchase what you can you can afford. A little bit of something is better than a whole lot of nothing.
Buy term, invest the difference, plain and simple. It does depend on what your annual salary is now, generally 5 times the amount of your current annual income to. A financial needs analysis can greatly help you decide.
That completely depends on what the person needs. Do you want to pay for college for kids? Pay off a mortgage? Who and WHAT are you providing for in the event of your death? Most business owners that I work with don't think about Life insurance until they are in their late 40's or 50's and at that point there may be some pre existing 'health conditions' that can make a Life insurance policy more expensive. Life insurance is a great tool for financial planning. I personally have 3 policy's. 2 term Life and one permanent policy. Important to at least LOOK at the options...especially if you have a family or are a business owner.
As some have mentioned here, first and foremost you need to do a proper Financial Needs Analysis using the Dime Method ( Debt, Income replacement, Mortgage and Children's education). Keeping these factors in mind and there may be others, you will then be able to assess the proper needs and then coverage for the client. I use our full financial needs analysis program which is complimentary to all of our clients based on their needs to show them precisely how much coverage they require based on their answers and input. The product to best serve in every situation is always Term Life insurance. Each element has its own time line or term. Along with this we educate our clients with the "Theory Of Decreasing Responsibility". We believe and teach our clients how to become self-insured. Have high value, low cost term life insurance when cash and assets are low but responsibilities are high while growing money, assets and net worth so later when responsibilities are low and net worth has met or exceeded the earlier years and now you are financially independent. This is financial planning 101 and answers the concerns of dying too soon or outliving your money. The only need for whole life insurance is so that the company and the agent get paid for the whole of your life. Want to know more direct message me here or at [email address]
Great answers. As a Financial Planner, I believe it is necessary to take a look at the entire financial picture in order to determine what is the correct amount. If budget is an issue, minimum amount = sufficient to pay off all debts (house, credit card, auto and any personal debt) OR if that cost is too great - whatever is affordable then begin the process of creating a budget and getting finances in order. Some companies offer employer paid group life, but, you should not count on that in your long term plan. BTW - if someone is single and doesn't share debt with anyone else - not a fan of purchasing life insurance unless you need another vehicle to save tax free.
I really like the Dave Ramsey approach. Purchase a term life insurance policy for a low monthly premium and invest the money you would have spent on a whole, universal, or variable life insurance policy. You will make a whole lot more on the interest from your own investment than one of these policies will ever pay out. As far as the amount of term life, we always recommend 10-12 times your annual income.
Each individuals situation is different. Assessments of individual clients should be made of the clients health, age, life style, and finances. After the assessment is completed the agent can then put together a customized plan of coverage to meet their particular need. The following factors are to be considered when purchasing life insurance.
The average funeral these days cost between 7,000 - 10,000 dollars, (https://www.parting.com/blog/f...). If the client has a mortgage, coverage to pay off the mortgage in the event of an untimely death. Income for the family if the insured is the bread winner or contributes income to sustain the family - especially where there are children under age 18 or disabled persons in the household; outstanding debit is another factor to be considered when purchasing life insurance.
Another important factor is how much can one afford to pay comfortably for coverage. In some cases a client may only be able to afford burial coverage, therefore an agent has to provide options that are in the best interest of the client in order for them to make a better informed decision to meet their needs. A good agent will also do a review at minimum annually to reassess their clients particular situation as it pertains to need changes, giving the client opportunity to explore and adjust coverage options.
The only way to find out what you really need is to sit down with someone in that field let them ask you question hopefully they know all the right question if they are listing to you, you should be covered in the right way Our job as insurance agents is to listen, Assess, figure out a solution with your client , agree, move forward, follow up make them confident on their decision that’s how much you need
Critical issue is this, insurance companies are severely limiting ability to convert term insurance to a decent product except maybe a couple to a few years. Adverse selection they claim. Level premium term anesthetizes client to as time goes on, an artificially low premium until too late. Client in poorer health and nothing to convert to. Term insurance used to have an expectancy of around 5% which means that if client paid premiums 5% of the time it paid a death claim. Now that figure is less than 1%. Why do you think term is 1/10 th the price of a couple decades ago? Insurance companies are the House and odds are 99 to 1. Companies are developing permanent index products that initially charge about a 30 year term rate and have those guarantees BUT client doesn't just increases premium later rather than having to "convert".
Steve CLU ChFC CFP CEBS MSFS MOUSE