There are a couple of different ways to think about life insurance. The first, and most obvious, is that it is a tool to assure that your family will have the financial resources to pay for mortgages, utilities, pay off big ticket items like cars, send children to college, and continue to survive financially if something happens to you.
This means that you can look at your debts, your monthly expenses and your anticipated needs and calculate what it would take to protect your family without your income. This provides you with a range of how much insurance your might need to purchase.
A second way to think about Life Insurance is that it is a tool for you to provide for your children or grandchildren with a tax-advantaged inheritance. Most wealth that is passed from one generation to the next is subject to taxes that makes the gift lose value and may actually propel a child or grandchild into a higher tax bracket for the income they have without the inheritance. Life Insurance is a way to eliminate the penalties on that income to your children or grandchildren. It has become a popular tool in estate planning.
If you are lucky, your employer may have provided you a life insurance policy based on your income from them. That means that should you die, your family would receive some portion of your annual salary or your full salary for a year or for some period of time. These are generous benefits from employers and helpful for families who experience tragedy of the wage earner.
However, this type of life insurance is not sufficient and is not intended to protect the surviving family members for things like mortgage payoffs, sending children to college or to maintain a household lifestyle without the regular income.
That means that every family needs to consider what makes sense for them for life insurance policies. How would you make ends meet should the unthinkable happen? What would it take to pay off the house or cars, credit cards or other debts? Do you have savings that would enable you to send children (or grandchildren) to college as planned? How will you pay your routine monthly bills?
That is where life insurance that you purchase outside of that offered by your employer becomes important. These independent policies put you in control of your benefits, how they will be paid and who they may cover. A policy you purchase for yourself is not dependent on your job, in the amount that actually would be needed by your survivors.
Life Happens has a tool to help you estimate the amount of Life Insurance you may need to protect your family. Beyond that we work with our clients to assure that you have a plan that provides you the most coverage for a price you are able to afford. Call us to talk about your specific situation. We have plans that can help!
Give us a call at 931-363-5307. We can help!