Today’s post is from my friend Chris Huntley. Chris is president of Huntley Wealth and also happens to be a great writer, too. Take it away Chris!
Is Life Insurance a Good Idea?
Hannah Boykin’s parents didn’t think so.
And tragically, both of them passed away within 14 months of each other, leaving 6 kids behind (mostly teenagers) with no financial support.
The children were devastated, not just because they lost both of their parents, but also because they had to be split up. No one in the family could afford to take all of them at once.
We heard about Hannah’s tragic story when she applied for our scholarship. Hannah is extraordinary in that throughout this experience, she still managed to graduate at the top of her class in high school and start a nursing program.
…but after being split up from her brothers and sisters, and suffering the effects of zero financial support in college, I can’t help but wonder how things would have been different for her family if life insurance had been in the picture.
I tell that story not to scare you into buying life insurance but to show that death can not only be unexpected, but it can also have a lasting impact beyond the loss of a loved one.
Fortunately, there’s a simple and affordable way to prevent Hanna’s story from EVER becoming your family’s story… life insurance.
Do you really need life insurance?
The short answer is, most likely yes.
…let me explain.
If you rent or own a home, and can’t answer the question, “Where would my family be living 1 year from today if I suddenly died,” you need life insurance. (HINT: The answer should be in the exact same place they are living now.)
In fact, if anyone in your family at your workplace relies on the income (or services) you provide, and would be impacted financially by your death, you need life insurance.
According to LIMRA, the top four reasons people buy life insurance are as follows:
- To cover burial and other final expenses
- To transfer wealth or leave an inheritance
- To help replace lost income
- To help pay off a mortgage
Between all of these, most people are covered. Let’s take a look at each one in turn:
#1 – To cover burial and other final expenses
Whether or not you have people depending on you financially, you can’t escape these expenses.
…funerals and burial aren’t cheap either, running about $11,000 on average.
A guaranteed universal life plan for that amount is fairly cheap, costing less than $20 in many cases, so don’t leave it up to your family or GoFundMe to foot the bill.
You can request a guaranteed universal life quote by clicking here and selecting the “Lifetime” option under the “term period” dropdown.
#2 – To transfer wealth or leave an inheritance
If you’re independently wealthy, you might think you don’t need life insurance. But if your estate is worth more than $5.49 million (or $10.98 million for married couples) in 2017, you’ll pay a staggering 40% federal estate tax on the amount above that threshold.
Having enough life insurance to cover those taxes means that Uncle Sam gets less of your money and your heirs get more.
Just make sure your life insurance benefit is paid out correctly. If not, it could be included in your estate and be considered taxable. Read this article to learn more.
If you’re not independently wealthy but still want to leave something for your kids, you can still do it.
For example, let’s say a 65-year-old man earning $50,000 a year on his pension wants to leave $150,000 for his three children to divide up.
Assuming he lives until age 80 and gets a 5% return after tax, he’d have to set aside $6,951 every year to make that happen.
On the flip side, if that same man is in good health, he could get a guaranteed universal life policy that would pay out $150,000 for as little as $3,065 per year.
…that’s less than half the cost.
Plus, he doesn’t have to save until age 80 to make it happen. If he were to pass away the next week after purchasing life insurance, his heirs would still get the full $150,000.
The best way to cover an estate planning need is usually with guaranteed universal life. It costs on average half what whole life insurance costs and offers guaranteed coverage for life. You can request a quote by clicking here and selecting the “Lifetime” option under the “Term period” dropdown.
#3 – To help replace lost income
At the outset, I asked, “If you were to die tomorrow, where would your family live a year from now?“
How about 3 years? Will your spouse still be able to make rent or mortgage payments? Will your kids still be able to do sports or other extracurricular activities?
If you’re the breadwinner in your relationship, losing your income could limit your family’s future, especially if you still have 2 or 3 decades left in your working career.
Term life insurance is the best way to cover lost income. It’s cheap and flexible. For example, a 35-year-old male in good health could get a 30-year $500,000 term policy for as little as $38 per month.
…you’re not stuck with 30 years either. You can typically choose between a 10-, 20-, 30- or even 40-year term.
#4 – To help pay off a mortgage
Debt can weigh you down in any financial situation, but more so when you’ve just lost a loved one.
That’s why a lot of people get life insurance help their spouse pay off their biggest debt — their mortgage — in case they die prematurely.
…but what about other debts?
Basically, you might want to consider getting enough coverage to pay off any debt that both you and your spouse hold. Again, it’s not about getting rich. It’s about preserving your family’s way of life.
3 tips to help you get started
As you can see, there aren’t many situations where you don’t need life insurance.
So, to help you get started on the right foot, here are three tips:
#1 – How to buy life insurance
Work with an independent agent to make sure you’re getting the best deal on your life insurance.
…you’ll know if an agent is independent if they’re offering you quotes from several different insurance companies.
If they sell insurance from just one company, you’re likely not going to get the best deal out there.
You can usually get free quotes online and then go from there.
#2 – Use these ways to save
There are several ways to save on life insurance, but here are the top three:
- Pennies from Heaven strategy – Instead of choosing a policy with a lump sum payout, opt for one with an income option. This can save you 10% to 30% while still offering a steady income. This is a proprietary savings strategy we use at Huntley Wealth, so if you’re interest in this strategy, request a quote here and tell your agent to show you the Pennies from Heaven quotes.
- Lose a few pounds – There’s a 25% price difference between health classes, and in many cases, they’re separated by only a few pounds or a few cholesterol or blood pressure points. Take a week to exercise and eat well to improve your health prior to applying for coverage, and you could save 25% to 50%.
- Do the medical exam – No-exam life insurance sounds tempting — who else hates needles? But these policies cost 10% to 40% more because the insurance company can’t assess your health risk as well. So, unless you have major health problems or have an urgent need for the coverage to take effect, take the exam.
Read this article for more ways to save on your life insurance policy.
#3 – Watch out for the hard sell
Life insurance agents make money when you buy a policy from them.
…so naturally, there’s a conflict of interest.
If you ever feel uncomfortable about the way an insurance agent approaches the sell — especially if he or she is spending a lot of time on expensive whole life insurance — don’t walk …run to your nearest exit.
It’s Hero Time
We all believe we’re invincible, but the fact of the matter is that unexpected deaths happen all the time. What’s more, life insurance gets more expensive as you get older.
So it’s time to make a choice…
If you want to be able to protect and provide for your family (even if you’re not here), you can click here to start with a free quote right now — It literally takes less than 1 minute!
I know… that’s some bigtime superhero, life-after-death talk right there, but I’m being serious.
The alternative is to leave your family’s well-being in the hands of chance, who could face serious obstacles without you.
To achieve instant “hero” status, make sure your loved ones are protected, and punch death in the face, click here now.