Where do you
begin in the process of buying life insurance?
Keep in mind
that if you own a business, you actually have another “family” – a“business family”.
The question
becomes:do you care what happens to
your family if you should die suddenly – and if you own a business, if you were
to die prematurely, what would happen to your business and to your employees?
Evaluate your
family’s needs
Gather
personal information and estimate what your family would need if you were gone
Expenses at
death such as medical and funeral expenses
On-going daily
expenses
When you think
about how much life insurance you need, there are a number of factors to
consider:
Funds for immediate needs at death(funeral,
final illness expenses, potential estate taxes)
Funds for readjustment period (time/training
to find new job,
new housing, other adjustments)
Funds for ongoing needs (monthly bills
& expenses, day care,
college tuition, etc.)
When
figuring out how much life insurance you need, three methods are often used:
General rule of thumb:7 X annual gross income, based on various studies done by LIMRA
1999.(Other studies have suggested as
much as 15 X your income.)BUT you are
unique; your situation is individual.So
why not….
Do actual analysis of your specific needs
Or calculate the value of Human Life
Let me show
you what I’m talking about:
In a Needs
analysis; you list all the potential things that might need to be paid at
death, such as funeral, fund for child care, mortgage, pay off credit card and
other debts, develop a fund for children’s education – probably college, set
aside an emergency fund, etc.
Then, you
subtract the income and assets available to pay those expenses.Is there life insurance in place?How much?How much Social Security (if any), will the surviving spouse qualify
for?Are there stocks, bonds, mutual
funds, college savings, retirement plan assets, business interests, rental
property, real estate, etc.An important
question to consider:will the surviving
spouse be able to liquidate the assets at full value?Will there be taxes on those assets?
Then you see
which line is larger – and whether more insurance is needed to keep the family
or business in their same world.
I look at this from a different angle than most. I would first assess why you are purchasing the life insurance (income replacement, legacy, investment vehicle, end of life expenses, etc). Than I would determine how much money a month you can afford to pay for life insurance. At this point find an experienced agent and give him a monthly budget to find the proper policies to meet the reasons why you are purchasing the policies. An experienced should be able to find the proper policy, or mix and match policies to optimize your monthly budget to achieve the reasons why you are purchasing the insurance.
Something is better than nothing for starters enough to put you in the ground or pay for your final expenses because being buried in the backyard is not a good option. If you have a family you love enough to cover the mortgage and set them up for at least a year to move on with their lives.
In short - I don't advise clients to go more than 8 to 12 times their annual income during their earning years, especially if they have dependents who rely on their income stream. Clients also need to understand that their health issues, prescriptions and family history can impact their rates so they need to look at all options.
This would depend on the financial needs and goals of the individual client. If they are wishing to use it just for burial, then 15,000 is fine. If they are wishing to leave there family money or leave a legacy...... then any amount to cover the need is appropriate as long as it does not cause a financial burden later on.
My first death claim was on my 21 year old brother, Allen in 1971. Allen was in a car wreck in Houston. Allen was single with no children. His life insurance policy was $20,000.
After helping clients for over 47 years now with life insurance planning, there is only one common denominator I have found. At the death of a client/brother, we are the only one attending the funeral who brings the family, widow, children & business partners a check. While the emotional loss of anyone is always sad & often tragic, the financial loss created by death can be softened with adequate life insurance. What is the right amount? It depends on each client and the various purposes the life insurance is being used for in their specific lives. When assisting with life insurance, each case, (family or business) is custom designed to meet the clients specific goals, objectives and budget. Don W. Ames, CLU, ChFC, LUTCF, CEPA
The most important thing is to do a NEEDS analysis to determine what your needs are. Next, you should find a trusted agent you can rely on for putting your interest first before their commission or bonus.
It is imperative you have a budget to best understand what you can afford versus simply what you need or want.
It is also essential to have a will, health care directive, health care power of attorney, and a regular power of attorney. It is also important to make sure your property is tilted properly and your beneficiaries are identified accurately.
There are various type of life insurance and some are great for many and many are great for few. Read, educate yourself, challenge you agent to describe and explain not only the differences but why one choice is preferable to another to meet your specific needs.
Lastly, make sure the agent is licensed in your state.
There are some great thoughts on here. One thing to keep in mind is the first question a funeral director will ask - "How much is your budget?" or "How much life insurance did he/she have?". If you tell them that your life insurance was $200,000, they will know they have a larger budget. If you tell them they had a $10,000 final expense policy, that puts it in a different perspective. When assisting someone with life insurance needs, make sure they have a separate Final Expense Policy for $10,000 or $15,000 so the ones who are having to make the decisions know exactly how much they can/should spend.
Each individual has their own unique needs for coverage . That being said , it is necessary to do a proper fact finding to uncover all the needs for your client!
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Answers (61-70)
Where do you begin in the process of buying life insurance?
Keep in mind that if you own a business, you actually have another “family” – a “business family”.
The question becomes: do you care what happens to your family if you should die suddenly – and if you own a business, if you were to die prematurely, what would happen to your business and to your employees?
Evaluate your family’s needs
Gather personal information and estimate what your family would need if you were gone
Expenses at death such as medical and funeral expenses
On-going daily expenses
When you think about how much life insurance you need, there are a number of factors to consider:
Funds for immediate needs at death (funeral, final illness expenses, potential estate taxes)
Funds for readjustment period
(time/training to find new job,
new housing, other adjustments)
Funds for ongoing needs
(monthly bills & expenses, day care,
college tuition, etc.)
When figuring out how much life insurance you need, three methods are often used:
General rule of thumb: 7 X annual gross income, based on various studies done by LIMRA 1999. (Other studies have suggested as much as 15 X your income.) BUT you are unique; your situation is individual. So why not….
Do actual analysis of your specific needs
Or calculate the value of Human Life
Let me show you what I’m talking about:
In a Needs analysis; you list all the potential things that might need to be paid at death, such as funeral, fund for child care, mortgage, pay off credit card and other debts, develop a fund for children’s education – probably college, set aside an emergency fund, etc.
Then, you subtract the income and assets available to pay those expenses. Is there life insurance in place? How much? How much Social Security (if any), will the surviving spouse qualify for? Are there stocks, bonds, mutual funds, college savings, retirement plan assets, business interests, rental property, real estate, etc. An important question to consider: will the surviving spouse be able to liquidate the assets at full value? Will there be taxes on those assets?
Then you see which line is larger – and whether more insurance is needed to keep the family or business in their same world.
I look at this from a different angle than most. I would first assess why you are purchasing the life insurance (income replacement, legacy, investment vehicle, end of life expenses, etc). Than I would determine how much money a month you can afford to pay for life insurance. At this point find an experienced agent and give him a monthly budget to find the proper policies to meet the reasons why you are purchasing the policies. An experienced should be able to find the proper policy, or mix and match policies to optimize your monthly budget to achieve the reasons why you are purchasing the insurance.
Something is better than nothing for starters enough to put you in the ground or pay for your final expenses because being buried in the backyard is not a good option. If you have a family you love enough to cover the mortgage and set them up for at least a year to move on with their lives.
In short - I don't advise clients to go more than 8 to 12 times their annual income during their earning years, especially if they have dependents who rely on their income stream. Clients also need to understand that their health issues, prescriptions and family history can impact their rates so they need to look at all options.
This would depend on the financial needs and goals of the individual client. If they are wishing to use it just for burial, then 15,000 is fine. If they are wishing to leave there family money or leave a legacy...... then any amount to cover the need is appropriate as long as it does not cause a financial burden later on.
How and where can u get free Continue ed credits ?
My first death claim was on my 21 year old brother, Allen in 1971. Allen was in a car wreck in Houston. Allen was single with no children. His life insurance policy was $20,000. After helping clients for over 47 years now with life insurance planning, there is only one common denominator I have found. At the death of a client/brother, we are the only one attending the funeral who brings the family, widow, children & business partners a check. While the emotional loss of anyone is always sad & often tragic, the financial loss created by death can be softened with adequate life insurance. What is the right amount? It depends on each client and the various purposes the life insurance is being used for in their specific lives. When assisting with life insurance, each case, (family or business) is custom designed to meet the clients specific goals, objectives and budget. Don W. Ames, CLU, ChFC, LUTCF, CEPA
Mr. Jones:
The most important thing is to do a NEEDS analysis to determine what your needs are. Next, you should find a trusted agent you can rely on for putting your interest first before their commission or bonus.
It is imperative you have a budget to best understand what you can afford versus simply what you need or want.
It is also essential to have a will, health care directive, health care power of attorney, and a regular power of attorney. It is also important to make sure your property is tilted properly and your beneficiaries are identified accurately.
There are various type of life insurance and some are great for many and many are great for few. Read, educate yourself, challenge you agent to describe and explain not only the differences but why one choice is preferable to another to meet your specific needs.
Lastly, make sure the agent is licensed in your state.
Good Luck.
There are some great thoughts on here. One thing to keep in mind is the first question a funeral director will ask - "How much is your budget?" or "How much life insurance did he/she have?". If you tell them that your life insurance was $200,000, they will know they have a larger budget. If you tell them they had a $10,000 final expense policy, that puts it in a different perspective. When assisting someone with life insurance needs, make sure they have a separate Final Expense Policy for $10,000 or $15,000 so the ones who are having to make the decisions know exactly how much they can/should spend.
Each individual has their own unique needs for coverage . That being said , it is necessary to do a proper fact finding to uncover all the needs for your client!