Life insurance is a crucial protection for families, especially those with young children, but often it doesn’t get the attention it deserves. Just as you occasionally reevaluate your car or homeowner’s insurance, it’s worth taking time to also look at your life insurance policy to see if it still meets your needs. And if you don’t have a life insurance policy, now may be a good time to obtain coverage.
Start by asking yourself the following questions:
- Am I the primary or only wage earner in my household?
- Am I the lead pastor and/or main revenue creator for my ministry?
- Have I recently had a life event happen (marriage, new baby, bought a house, taken on debt, etc.)?
- Did I recently start a business using personal assets as collateral?
- Did I purchase my current policy before January 1, 2009?*
- Do I have a need for long-term care insurance?
If you answered yes to any of these, you have good reason to consider increasing your coverage or obtaining life insurance if you don’t have it. You should have enough coverage to give your family peace of mind about their financial future if you were to pass away prematurely. Requesting a quote is simple and free.
How Much Coverage do I Need?
Most people underestimate their coverage needs. It is recommended to obtain, at the minimum, the equivalent of five to ten times your annual salary plus enough to cover 70% or more of any debt you may have.
Having 10 times your annual salary in coverage helps ensure your loved ones will have adequate provision to maintain their current lifestyle and avoid the stress of financial hardships. Additionally, if you have children, the funds may be invested for their future educational or other needs that your income would have provided. In addition, your loved ones will not have to pay federal income tax on the life insurance benefit they receive.**
What if I can’t afford the coverage I need?
According to the 2017 Insurance Barometer Study research report by LL Global/LIMRA and Life Happens, consumers often overestimate life insurance costs which can keep people from buying life insurance at all. This also means people who do decide to buy life insurance often fail to obtain the amount of coverage they truly need because they mistakenly believe it will cost too much.
For example, the median estimate for a $250,000 term life insurance policy for a healthy 30-year-old was $500, which is three times what it would actually cost.
Life Insurance with Long-term Care Riders: One Product, Two Solutions.
Long-term care (LTC) is becoming more important as the Baby Boomer generation approaches retirement and beyond. Traditional LTC policies have increasing premiums, which are less than ideal. They can often be a budget buster for those in retirement. Additionally, not all of these policies offer a death benefit, so many times the policy holders may feel like they never receive any benefit for the premium dollars they are spending each year.
To meet these needs, insurance companies have created LTC riders that can be added to both term & permanent life insurance policies. For a modest increase in premium (often less than 10%) you can turn your life insurance death benefit into a pool of LTC benefits. Even better, if you never need the LTC benefits, you have peace of mind knowing that your family will receive the life insurance death benefit when you pass away.
AG Financial Insurance Solutions provides life insurance customized to fit your personal and ministry needs. If you would like more information, call 866.621.1787 or email us.
*This is the legal date at which insurance companies must use the new 2001 Mortality Table. As life expectancy increases, insurance premiums decrease. You may find a new policy costs less than your current one, even if you are older.
**Based on current tax laws, life insurance bought with after-tax dollars is transferred to beneficiaries tax-free. To avoid a taxable event for your church, never mix personal and key man insurance policies.