What is Life Insurance Awareness Month?
September is Life Insurance Awareness Month.
The children are starting school, and life is resuming its normal routine as the lazy days of summer come to an end. There is one constant that does not change with the seasons… family.
Hold on — what if the family dynamic suddenly changed? The loss of a breadwinner or caregiver could be catastrophic to a family. Alone, the emotional rollercoaster shattering but coupled with financial strain could lead to mental and financial disaster.
There are plenty of reasons why so many Americans don’t have the life insurance coverage they need to protect their families. In my experience, procrastination tops the list.
“It’s on my to-do list” and “I plan to get to that soon” are common excuses people give to put off making what could be the most important financial decision they’ll ever make or, regrettably, not make.
There’s a growing crisis in America of people not having enough life insurance coverage to provide for their loved ones in the event of their premature death. It is estimated that more than 60 million Americans lack sufficient coverage.
When the worst happens and someone isn’t prepared financially, the consequences can be dire. Those left behind are often forced to work additional jobs or longer hours, borrow money from friends and family, spend down retirement or college savings, and move to less expensive housing. It doesn’t need to be that way.
Today, far too many American families endure severe financial hardship when a loved one dies. Your family deserves to be protected — it’s just a few dollars a month but well worth the investment.
Life Insurance As Financial Security
Life Insurance can enable you to save your family by replacing lost income or giving funds to pay outstanding invoices or taxes in the event of your death.
But, many of us do not need to suppose what happens after we’re gone, it’s necessary to understand what life insurance means for you should you decide to pay for it.
Your desire for life insurance can change over a lifetime.
If you are imagining life insurance as financial security for your family in case of your death, here are some strategies that show how needs may differ:
A single person may not need much life insurance if the surviving partner is able to make a good income and there are no important debts to pay off.
Families usually need life insurance because young children rely on their income.
People with mature children are less likely to require life insurance, for instance, if you are over 65 and your children live alone.
There is no accurate formula to tell you how much insurance range you need, regardless, it is usually suggested that you purchase between five and ten times your total annual income.
Below this formula, a family with an income of $40,000 might require at least $200,000 of life insurance safety.
There are no limitations on the number of beneficiaries you can name, or how you decide to divide your property amongst them.
It is also suggested you name a second beneficiary, also called a contingent beneficiary, in case something was to occur to your primary.
It is the duty of the beneficiary to awaken the insurance company of your death, which is why it is significant to keep your policy data safe and accessible and keep your beneficiary fully notified.
A death certificate or other legal paper will be needed to verify your death.
The National Association of Insurance Commissioners (NAIC) has established a national service that provided customers with search abilities to help find a deceased person’s lost life insurance policies.
Life Insurance Benefits:
- Life Insurance Payouts are Tax-free:
If you have a life insurance policy and you die while your coverage is in effect, your inheritors will get some death benefits. Life insurance payouts aren’t considered income for tax objectives, and your inheritor doesn’t have to report the money when they file their tax returns.
- Your Children’s Won’t Have to Worry About Living Expenses:
Many professionals suggest having life insurance that’s equal to seven to ten times your annual income. If you have a policy of that size, the people who rely on your income shouldn’t have to worry about their living expenditures or other important costs.
- Life Insurance Can Cover all Expenses:
The national basic cost of a funeral that included viewing and burial was $7,640 as of 2019.
Because many Americans do not have sufficient savings to cover even a $400 situation expense, having to pay for a funeral can be a significant financial burden. If you have a life insurance policy, your inheritor can use the money to pay for your funeral expenses without having to dip into their own savings or use credit.
Best Describe Term Life Insurance:
Term life insurance policies can start anywhere from one to thirty years.
This is great, as you get to define the precise amount of coverage you want, and the duration of time you most require it for.
On the other hand, full life insurance encircles you for your whole life but will end up having a larger financial cost related to it.
Term life insurance enables you to save money and place it into other accounts that will grow. a whole-life or universal life policy both offer a cash-value savings account that is tax put off to later.
This means that you’ll slowly accumulate wealth, the longer you hold the account. Still, we still think a term life insurance policy will benefit you the most.
It is better to place extra income into stores, bonds, joint funds than to hold it in a savings account.
Why life insurance is important:
1: Provide for lost income
One of the main reasons individuals buy life insurance is to ensure that their loved ones will not encounter financial hardships if they die unexpectedly.
For example, your family might not be able to pay your mortgage or cover your children’s education costs if you die unexpectedly. Your life insurance death advantage can help pay for these.
2: Help cover bills and debts
If you pass away with credit card debt or a car loan, having life insurance can help enclose these expenditures so the costs aren’t left to your loved ones. Your life insurance policy can also enable you to pay for your funeral ceremony and burial.
3: Reduce stress
When a loved one passes away, it’s always a sensitive and stressful time. This already tough interval can be more problematic if there are concerns about replacing income and covering bills.it can give a bit of shelter for your family to get back on their feet.
(5) Five Things to Know to Protect Your Future:
Protecting your future and your family’s economic safety is essential. Let’s discuss five things that are important to protect your future
1: What is disability insurance and how does it function?
Disability insurance displaces a part of the capable person’s income when that insured person is unfit to work due to a covered accident or illness.
Advantages start after a specified time called a waiting interval.
During this waiting interval, the insured must be disabled, due to a disease or accident, as clarified in their insurance policy
Why do all doctors of optometry require disability insurance?
Doctors should assume disability insurance as the opportunities of becoming disabled before retirement are almost over 1 in 4 for today’s 20-year-olds. Accidents are not usually the offender.
Back injuries, cancer, heart disease, and other disorders cause the majority of long-term shortages, according to the Council for Disability Awareness.
Social Security gives some disability benefits, but the benefits may be low in comparison to a doctor’s income and require that the doctor be hardly disabled.
How should doctors of optometry determine how much disability insurance they require?
Doctors should assume that most economic consultants suggest experts displace at least 60-67% of their gross pre-disability income.
The part of a disability benefit spent by a doctor with after-tax income is not supposed taxable income when collected as a disability income.
What kinds of plans are functional, and what are the pros and cons of each strategy?
There are many various benefits accessible, providing a doctor with a vast chance to tailor coverage to their special needs and budget.
A doctor can select how much benefit they want to obtain, up to a certain percentage of their salary relying on the plan, when it begins and how long the benefits continue.
Why is it so important for doctors to have the “own occupation” benefit included in their disability insurance policy?
A disability insurance policy with an “own occupation” definition of disability nearly means that if a doctor is unable to practice due to a covered sickness or an accident, then they will be able to receive a disability benefit.
In a policy that does not contain an “own occupation” definition of disability, a doctor may not allow for disability benefits if they are capable of working in another field for which they are satisfactorily skilled or educated.
Five Reasons to Buy That Life Insurance Policy Today Instead of Tomorrow
Making a decision to purchase life insurance is a deeply personal decision.
Many people are fully aware that they need it, but they don’t know where to start looking and may think it’s something that they can’t afford.
Others may need life insurance and not know it, because they believe they are covered in some capacity through benefits at work or associations. And, some may not need it right now, but will definitely need it in the future.
One thing that we always tell our clients is that you can never buy life insurance too early, but you can buy it too late.
No one can predict the future, and there are many merits to stop putting off getting that life insurance policy when you are young.
Here are 5 reasons why you may want to consider purchasing that policy or at least consider your options today instead of tomorrow:
1. The premiums for your policy will never be cheaper than they are today. For the budget-conscious family, this is a very important point.
Deciding to buy a policy a few months after you need it can raise the premiums due to an increase in your insurance age.
Life insurance companies generally date your insurance age within 6 months of your nearest birthday.
If you are 34 and 8 months old, your insurance age is 35. A 35-year-old will pay higher premiums than a 34-year-old.
2. Your health is still good. Putting off that decision to buy life insurance later on in life may actually mean that you will find yourself uninsurable.
Lots of things can happen in the span of a year, and a life-threatening illness is one of them. If this happens you may not be insurable or can find yourself paying significantly more in premiums than someone of standard health.
3. You may not make it long enough to buy that policy. One of the best things about life insurance is that it has the potential to pay out a significant return with minimal premiums invested.
There have been cases of claims on life insurance policies due to accidents within months of policy issue. Since we don’t know the future, living without a policy is placing the unnecessary risk on your family.
4. The underwriting will be more lenient when you are younger. I don’t know too many people that are happy get medical tests done. While these are necessary to secure a policy, what is required can be significantly less invasive when you are younger depending on the level of insurance.
A typical policy these days asks younger individuals for a medical questionnaire, a blood sample, and a urine sample. When you are older they may require full paramedical exams, resting ECGs, physicals, etc.
Note: Underwriting is case-specific and will be determined based on the face amount of the policy and previous health issues.
5. Insurance is on sale. I’m sure you’ve seen these incredibly low-interest rates as of late.
While this makes for a good time to borrow money, the insurance companies invest in safe interest-bearing investments such as government bonds. They will raise premiums to make up for this shortfall of income.
The first place to start with life insurance generally begins thinking about the what-ifs in life.
When these thoughts occur regarding your family’s financial future then it is most likely time to start looking for the proper coverage and the right policy.
Just make sure you don’t wait too long.
September Life Insurance Awareness Month: [A Story]
September is LIAM
Every September since 2005 has been recognized as Life Insurance Awareness Month and each year more stories are told of the powerful and positive impact that life insurance has on families. My perspective on the value of life insurance certainly isn’t as powerful as many of the stories I’ve read and heard about.
The more I learn about life, the more I realize that it truly is the greatest love product ever invented. The following are a few short examples of famous businesses and people who utilized their life policies to help them with their personal passions.
Walt Disney and Disneyland are often quoted when people look at the results of owning cash value life insurance. Walt and his brother struggled in the early beginnings of the Disney Studio and used the cash value in their life insurance to help finance projects, most notably “Disneyland” in California.
It is often rumored that later on as they began their quest to start Disney World in Florida, loans from their policies was used to buy the property. This avoided public reporting or disclosures to allow others to spoil their vision.
Ray Kroc thought he was just going to sell milk shack machines to the McDonald brothers when he stepped into a partnership that later would have him founding the largest hamburger chain in the world.
After Ray bought out his partners, the McDonald brothers, he worked 8 years without a salary and used cash from his life policies to help finance his new business. Of course, he also used banks, but the insurance funds kept a level of protection for him and his family while providing funds in times of need for the business.
After the market crash in 1929, James Cash Penney kept his employees paid and was able to stay in business with loans from his life insurance. When the market crashed there were 1400 JC Penney stores in the US.
There are thousands of stories like this where businesses depended upon the cash value of their policies to keep their doors open and thrive while many competitors went bankrupt. Keep in mind that the banks were not around to loan money during those years.
Ok, so those stories are from a time when people took personal responsibility and the government was not expected to provide bail outs. Also, those are stories of huge success and it’s more difficult to relate to that in our personal situation. Well, since we are talking about the living benefits of insurance, I’ll share some stories of how families are benefiting from life insurance now.
My parents took out a small policy on me when I was born. The thought back in the early 50’s was that if a child died, the family would suffer enough with the loss of a child and that they shouldn’t have a double loss with having the financial burdens too.
So that little policy was something that my parents funded until my Dad had a talk with me about finances. I’m not sure if he told my brother and sister the same thing as they were older, but I realized that Dad was pretty sharp for not finishing high school.
But that’s a whole story, maybe a book, in itself. Dad said that the policy he took out on me could help me buy my first car, go to college, buy my first house and then retire with great financial security. I certainly didn’t see it all like Dad did, but I guess I didn’t always see his wisdom either (or at least see it at the time).
It wasn’t until that little policy taken out at my birth was 20 years old that I realized that a life insurance policy is more about living than dying. Ok, I get all that stuff about protection for the family to replace lost income and take care of the bills if you “DIE TOO SOON”. Nobody wants to think about that or certainly put too much effort into it. Besides a 20 year old can’t die, right? Keep in mind that these were the early 1980’s and interest was very high. In fact, I had CDs at the bank paying 16% and cash was king.
When I bought a vehicle, I borrowed money from my life insurance because the actual interest was about 12% lower than the bank rate. After repaying the life policy I could see how this was a more powerful financing tool than a simple savings account. The money in my life policy was really a ‘parking place’ for my money and as long as I aggressively paid it back, I was ahead of my friends who were savers.
Today, my saver friends are maybe earning a whopping 1% in their CDs and my policy is returning close to 6% without 1099 for taxes. My life insurance policies are now where I keep the second stage of my emergency fund which earns over 5%.
Those folks who take advice from a TV or Radio show are keeping their emergency fund in a simple savings account and losing money because of low/no interest and inflation.
Sorry, that steered away from my point. I’ve used that policy and more that I’ve bought as a means of financing every important major purchase. Of course, when a better way to finance happens I use it because I have the option to utilize the best strategy.
The key transition in behavior is that every time I look for utilize the funds from my life insurance, I look at alternative places and ALWAYS have a plan to replace the funds through some sort of amortization.
Also, there’s the realization now that by not putting everything into the government’s plan for retirement savings, I’ll have a low tax income in retirement. That’s another article too, where too many people look for tax savings today, not realizing that tax-deferral really means… ‘Tax-Postponed’.
Another more recent example of a great leverage from a life insurance loan is Doris Christopher. Most people know her as the Chicago housewife that started the “Pampered Chef”. That is an entire success story that needs to be studied by anyone who wants to work hard and start their own business. Doris started her business with $3000 in loans from her life insurance in 1980.
This starting capital and plenty of hard work with a great idea resembling Tupperware, allowed Doris to build a business that in 2002 was worth $700 million. Of course, then you could hope that your business could be bought by Warren Buffett’s company for $1.5 billion… all from a $3000 loan from your life insurance.
OK, so you now have some awareness and we didn’t even mention someone dying to benefit from a life insurance policy. The protection it offers is amazing too, but when a life insurance plan is structured properly, it provides so much more for the living.
Consider how important it is for the people you love, and then realize how it makes life so much better.
So, this September or anytime be sure to review your life insurance and update your beneficiaries.
Look at the strategies that could help you attain your dreams in life.
Make it a great day!