{"id":43,"date":"2020-03-05T18:46:14","date_gmt":"2020-03-05T18:46:14","guid":{"rendered":"https:\/\/smitherwoodinsurance.com\/?p=43"},"modified":"2020-03-10T19:50:39","modified_gmt":"2020-03-10T23:50:39","slug":"7-reasons-to-buy-life-insurance-now","status":"publish","type":"post","link":"https:\/\/smitherwoodinsurance.com\/life-insurance\/7-reasons-to-buy-life-insurance-now\/","title":{"rendered":"7 Reasons to Buy Life Insurance Now"},"content":{"rendered":"
By Estrin, Michael. \u201c7 reasons to buy life insurance now.\u201d\u00a0BankRate, Inc.<\/em>\u00a01 May 2015. Bankrate.com. 22 Febuary 2017.<\/p>\n Being a responsible adult means making sure loved ones who depend on you are financially safeguarded if you unexpectedly leave them behind. The way you provide that protection is with life insurance.<\/p>\n But a frightening reality persists. Three out of 10 Americans don\u2019t feel they have enough life insurance coverage, according to LIMRA, a financial services research and consulting firm.<\/p>\n \u201cTwenty-somethings won\u2019t buy life insurance because they feel invincible,\u201d says Brian Frederick, a\u00a0CFP\u00a0professional with Intrinsic Wealth Counsel in Tempe, Arizona. \u201cAt the other end of the spectrum, folks 50 or older have a hard time buying coverage, either because it\u2019s become more expensive or they have a hard time qualifying, medically.\u201d<\/p>\n The real \u201csweet spot\u201d for buying coverage is in your 30s or 40s, when you qualify for good rates, he says.<\/p>\n However, a New York Life survey found that the gap between the life insurance Americans have and the coverage they need increased 11 percent in six years.<\/p>\n Is your life insurance lacking? Probably, and here are seven reasons why.<\/p>\n While health insurance is a common employee benefit, it\u2019s not unusual to get life insurance at work, too.<\/p>\n The U.S. Bureau of Labor Statistics reports that three-quarters of full-time civilian workers are offered life insurance by their employers. The overwhelming majority of them take advantage of the benefit.<\/p>\n However, that work coverage usually isn\u2019t adequate, Frederick says.<\/p>\n \u201cMost employers give employees coverage equal to one to two times their annual salaries,\u201d he says. \u201cWhile this might be enough for someone who is single with no dependents, if you have a mortgage, young children or a nonworking spouse, you\u2019ll need more than that.\u201d<\/p>\n A common rule of thumb is that life insurance should provide seven to 10 times the insured person\u2019s annual salary.<\/p>\n \u201cBut that\u2019s just a starting point,\u201d says Frederick. \u201cFrom there, you need to get a full financial picture so you can dial in the right amount of coverage.\u201d<\/p>\n Frederick looks at a variety of factors, including a client\u2019s income, assets, liabilities and \u2014 perhaps most difficult to predict \u2014 plans for the future, such as for having additional children, or for retirement.<\/p>\n If you think you can\u2019t afford life insurance, you might be wrong. A study from LIMRA and the nonprofit insurance education group Life Happens found that 80 percent of consumers have the wrong idea about what life insurance costs. Millennials, for example, believe life insurance policies are more than three times more expensive than they actually are.<\/p>\n In fact, premiums for life insurance are typically lower than for other forms of insurance and are often less expensive than monthly bills for cable or cellphones.<\/p>\n \u201cA large majority of term policies written have premiums of under $100 per month, and for some people it\u2019s even possible to buy adequate coverage for under $50 a month,\u201d says Frederick.<\/p>\n Of course, the prices do vary based on age, gender and health factors.<\/p>\n Like just about any financial product, life insurance comes with some jargon. But it\u2019s all fairly straightforward, says Patrick McGonigle, a CFP\u00a0professional at wealth management firm Homrich Berg in Atlanta.<\/p>\n Broadly speaking, there are two types of life insurance:<\/p>\n <\/p>\n <\/p>\n Most people will end up buying term, McGonigle says, because the monthly premiums are substantially less.<\/p>\n \u201cThink of it like renting a house versus buying a house,\u201d he says. \u201cWith term insurance, you are covered for a set amount of time, much like if you were renting. After your term ends, you are no longer covered.\u201d<\/p>\n Permanent life insurance, on the other hand, is \u201cfor those with a lifelong need for insurance,\u201d he says. \u201cLike buying a house, as long as you continue to pay the mortgage (or the policy premiums, in the case of life insurance), the home, or policy, is yours.\u201d<\/p>\n Deciding which product is right for you can present some challenges, but a reputable professional should be able to walk you through the details, McGonigle says.<\/p>\n While it\u2019s easy to put off buying life insurance, the longer you wait, the more you\u2019ll spend.<\/p>\n \u201cUp until age 40, coverage only goes up by a little bit every year,\u201d says Frederick. \u201cOnce you hit 40, the increases become more noticeable, and by 50 they become even more pronounced.\u201d<\/p>\n McGonigle points out that a 20-year term policy with a $250,000 death benefit might cost $13 a month for a healthy man who\u2019s 25. But that same policy purchased by a healthy man who\u2019s 50 would cost $43 dollars a month.<\/p>\n \u201cThe older you are, the more expensive the premiums,\u201d McGonigle says. \u201cThink about it this way: It is highly unlikely that a person would be healthier at age 40, 50 or 60 than they were at age 30.\u201d<\/p>\n But that doesn\u2019t mean you should buy coverage just because you\u2019re young. The key, says McGonigle, is for young people to lock in coverage when they need it.<\/p>\n Protecting the home and family are often the key drivers behind a life insurance purchase, says Scott Halliwell, a CFP professional with USAA Wealth Management.<\/p>\n Homeowners often need coverage to spare family members from the financial burden.<\/p>\n \u201cThis could mean making sure there\u2019s enough coverage to pay off the mortgage, even if the survivors ultimately decide not to use the money for that purpose,\u201d Halliwell says.<\/p>\n But while life insurance protection for the home may be seen as optional, providing for children is a different story.<\/p>\n \u201cFor parents, the need is much greater and less debatable,\u201d says Halliwell. \u201cIf a parent passes away, their children still need food, clothing and shelter. If the deceased parent\u2019s income was also the funding source for college saving, replacing this should be considered, as well.\u201d<\/p>\n Even a parent who\u2019s not the family breadwinner should consider life insurance.<\/p>\n \u201cReplacing the care a stay-at-home parent provides can be expensive, and life insurance can be a great source of these funds if the unexpected happens,\u201d Halliwell says.<\/p>\n Life insurance is designed, in part, to cover debts you leave behind. Should that include student loans, so they won\u2019t fall to your survivors? That depends on your lender.<\/p>\n \u201cIf you have a federal student loan, that debt is dischargeable when you die,\u201d says Tyler Montell, vice president of Meridian Wealth Management in Shelbyville, Kentucky. \u201cSo a surviving family member can request to have that loan discharged. The key is that the debt is dischargeable, not automatically discharged. That is an important distinction.\u201d<\/p>\n Private lenders are another matter.<\/p>\n \u201cWhile one company\u2019s policy may be to automatically discharge the debt, another company might assign it to a surviving spouse, parent or co-signer,\u201d Montell says. \u201cWorse, the loan contract might include an acceleration clause that brings the entire balance due at death.\u201d<\/p>\n Insuring against those outcomes is relatively easy and inexpensive, according to Montell. You need to factor your student loan into your liabilities when determining how much life insurance you need.<\/p>\n Nobody likes to think about aging and mortality, but as we advance into adulthood it\u2019s time to face reality, says Joel Steele, co-owner of Steele Financial Solutions in Cherry Hill, New Jersey.<\/p>\n \u201cSometimes, getting someone in their 20s or 30s to talk about life insurance is like trying to hold onto a fish \u2014 they squirm the whole time,\u201d he says. \u201cNo one wants to talk about life insurance or dying.\u201d<\/p>\n Younger clients tend to put off purchasing life insurance because they see it as optional \u2014 something they might not need just yet, or something that might not be worth the cost. Steele has a word for that logic: immature.<\/p>\n \u201cLife insurance isn\u2019t supposed to be about you,\u201d he says. \u201cIt\u2019s about taking care of your responsibilities and your loved ones. You\u2019re not a kid anymore. Your parents aren\u2019t going to take care of this for you. You need to accept the responsibility as an adult and take care of your loved ones because no one else in the world will.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" By Estrin, Michael. \u201c7 reasons to buy life insurance now.\u201d\u00a0BankRate, Inc.\u00a01 May 2015. Bankrate.com. 22 Febuary 2017. Being a responsible adult means making sure loved ones who depend on you are financially safeguarded if you unexpectedly leave them behind. The way […]<\/p>\n","protected":false},"author":1,"featured_media":44,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[6],"tags":[],"acf":[],"yoast_head":"\n\n