Category: Life Insurance

Even if you’re not always here for your loved ones, life insurance can offer a way for you to continue to take care of them even after you’re gone. Deciding how much life insurance you need is unique to each person, but there are several factors that can help you estimate the amount of coverage that can best meet your goals.

Final expenses

Along with the emotional distress of losing a loved one, paying for costly funeral expenses can add to the hardship, especially if your family does not have the savings to do so. On average, a funeral costs around $8,000, and can quickly increase with additional items and services. With life insurance, your family can rest assured that these expenses can be covered by the benefits of your policy. To help estimate how much will be needed for final expenses, think about your preferences for burial/cremation, cemetery plot, and memorial service.

Supporting your family

If you have a family or other loved ones who depend on you, you may be considering life insurance to help create a financial safety net for the future. When determining how much life insurance you may need, think about the cost of caring for your dependents, such as your children or parents. This includes the amount of money they would need to cover daily living expenses, like utilities, groceries, and medical costs, and perhaps nonessentials like vacations. To begin estimating the minimum amount of life insurance you may need, thinking about these questions can help get the ball rolling:

• How many years will my family need my financial support?
• How much income would I like to provide after I’m gone?
• How much would I like to provide for childcare?
• How much outstanding debt would I like to pay off?
• How much do I want to put into an emergency fund?
• Would I like to provide college funding for my children?

Tackling debt

If you have outstanding debt, your family may become responsible for paying down these amounts after you die, so this can be an important factor in calculating how much coverage you need. Debts can include credit cards, car payments, mortgages, student loans, and any other personal loans you may have. With life insurance coverage in place, your beneficiaries can use the benefit amount to help pay off this debt.

Paying for college

When deciding how much life insurance coverage you may need, you may want to consider the cost of sending your children to college. Tuition can be one of the largest expenses your kids will have, where the average in-state tuition at a public 4-year institution costs over $9,000 per year. This does not include additional expenses and costs of living, like books and supplies, room and board, and transportation. If your kids plan to attend college or a trade school, or are currently enrolled, you may want to include these amounts when determining the amount of coverage that is right for you.

Your age and health status

Your current age and health are commonly determining factors when deciding the type, amount, and cost of life insurance coverage. Typically, life insurance rates increase as you get older, since as you age, there’s a greater risk of death. This can be a good thing to keep in mind when deciding the best time to consider buying a policy. Certain pre-existing health conditions, like high blood pressure, diabetes, and high cholesterol, may also impact your eligibility and rates. Overall, the younger and healthier you are, the more affordable it usually is to get coverage, so don’t delay if financially protecting your family is at the top of your list.

The cost of life insurance

If you research how much life insurance coverage is recommended, you will likely see that many experts suggest estimating six to ten times the amount of your annual salary. This rule of thumb can offer a good starting point, but remember that since your individual situation is unique, you will want to consider all the factors that pertain to you. A financial professional can be very helpful in determining the type of life insurance and coverage amount that can meet your needs and budget. Together you can create a well-thought-out list of your financial obligations and goals and determine how much life insurance can ensure your loved ones are protected.

Life insurance is an important part of financial planning for everyone in your family. It’s designed to help protect our loved ones when we pass away, both financially and emotionally. Although most of us tend to imagine individuals when we think about life insurance buyers, coverage can also be extended to your children and other family members to help make everyone’s lives a little easier when a death occurs.

How to purchase policies for extended family

You can take out a life insurance policy on an extended family member or someone important in your life, such as a romantic partner or business partner. To do this you’ll need to get the person’s consent on the policy. In other words, you need him or her to know what you’re doing and you need to get their permission via signature to collect vital data, such as vehicle records, prescription records, and relevant health and life insurance information for the application. The person will typically have to undergo a life insurance medical exam as well.

Another important part of the process is demonstrating insurable interest, which means you need to be able to show proof that you will suffer emotionally and financially if the person dies. Typically, your spouse or parents do not have to prove insurable interest when purchasing policies. Other connections, such as a business partnership or a girlfriend/boyfriend relationship will need that documentation. Your insurance company will want to verify that there’s a true relationship between you and the person you want to cover.

It’s important to note that you cannot buy a life insurance policy for anyone you want. An acquaintance or stranger will be rejected by your insurance company.

Why you might want to buy coverage for others

There are many reasons why you might want to cover people with life insurance, depending on who they are, their relationship to you, and their situation. Here’s a breakdown of potential insurees:

Spouse or partner

Life insurance is an important part of securing a future with your spouse. It’s a good idea for you to have a policy that can cover:

• Outstanding mortgage payments
• Payments for any debts from your assets
• Investments or future income
• Day-to-day living expenses
• Child care expenses
• Final expenses when you pass away

For more on buying life insurance for your spouse check out our blog, how to buy life insurance as a couple.

Parents

Aging parents often come to depend on their children in their golden years and caring for them comes with financial responsibility. Buying life insurance for your parents can provide you with financial protection if they leave behind unpaid bills when they die. Some of the financial considerations that life insurance can help cover include:

• Medical bills – As your parents age, they may accumulate significant medical costs. Prescriptions, medical treatments, doctor or hospital visits, and other care costs may be outstanding when they pass away. If a parent dies in a hospital, the medical bills can be costly for the final days of treatment.
• Financial debt – If your parents have a mortgage, credit card balances, or other outstanding loans, those debts are often passed down to other family members, leaving them with bills they didn’t expect.
• Funeral expenses – When a parent dies, you may need to make funeral arrangements if they weren’t already planned. Funerals can cost thousands of dollars. Costs for a casket, urn, flowers, obituaries, transportation, use of funeral home and more can be a financial burden on you and your family.
• Moving a surviving parent – If one of your parents dies, you may want to move your living parent closer to home to care for her or him. Those moving expenses, as well as the process of selling the old home, can cost thousands of dollars, especially if your surviving parent lives out of state.
• Caring for your living parent – To care for a surviving parent, you may need to take time away from work, which can impact your income and savings. If a surviving parent requires long-term care in a facility, the cost can be significant.

Children

Life insurance is financial protection that helps dependents cover the bills when a family breadwinner dies. Very young kids don’t provide financial support to your family, so in most cases, it isn’t necessary to take out life insurance for them. The main reason you’d consider taking out a policy on a child would be to cover the cost of his or her funeral expenses in the event of an unexpected death.

A policy for a child would lock in premiums at a young age, protect your child’s insurability, and could be used for investment or savings for your child’s future expenses. However, while life insurance rates will go up as your kid ages, chances are they won’t ever be priced out of or denied a policy when they need it.

If you have an older child, and you cosigned student loans, mortgages, car loans, credit cards, etc., you may want to take out a life insurance policy to pay off those loans if your child dies prematurely. Conversely, as a son or daughter with a co-signed loan, you could take out a life insurance policy on your parents to make sure you can cover the costs on the money borrowed, should they pass away.

You can insure your child by purchasing a children’s life insurance policy or adding a child rider to your own life insurance policy.

Siblings and other relatives

There are some scenarios in which covering your brother, your sister, your aunt or uncle, or even your cousin makes sense. If your sister, who is taking care of your elderly parents, suddenly dies, for example, your parents may not be able to cover the care they need. To ensure their continued support, you would purchase a life insurance policy for your sister and name yourself the beneficiary. That way you would get the money to help care for your parents.

If you are considering a life insurance policy for your children or an extended family member, it’s a good idea to make an appointment with a financial professional to understand your options and develop a strategy.

North American, A Sammons Financial Company

As a stay-at-home mom, you may not be the family breadwinner, but the things you do for your loved ones daily are incredibly valuable. In fact, according to the 2020/2021 salary.com survey of 19,000 mothers, a stay-at-home mom’s salary value is equal to $184,000. Needless to say, all that you do every day would not be easy to replace. That’s why it’s so important to consider having a plan in place to help ensure your family could stay afloat. One option is life insurance. Here are some of the ways a life insurance policy can benefit your family:

Cost of living

The main benefit of a life insurance policy is to provide a death benefit to beneficiaries should you pass on. A life insurance policy can help to keep your family financially stable after you pass away. The death benefit proceeds from a life insurance policy can help to cover everyday expenses like mortgage or rent payments, utility bills, groceries, and more. Getting a payout from a life insurance policy could be a big help for your family to maintain their standard of living.

Debt

Should you pass away, death benefit proceeds from life insurance can be used to help pay off those debts or make them more manageable for your family. It can also be used to help pay for any of your outstanding debts.

Childcare expenses

One of the biggest expenses your family will have to shoulder without you is the long-term costs of child care. According to a 2021 Care.com survey, 72% of families say child care is more expensive and 46% of families say child care is more difficult to find, due to the pandemic. If you pass away, your kids will need someone to watch them while your partner is working. Your children may also need to be taken to school, the doctor, sports practice, and other places, so someone will need to drop them off and pick them up. Hiring a caretaker is a line item your family likely did not have in the budget. Death benefit proceeds from a life insurance policy can help to make sure your kids are looked after if you aren’t there.

Home costs

If you pass away, maintaining a home by cleaning, shopping, and cooking is a big job. Some of these chores can be covered by your partner but chances are good that help will be needed. This can also be a big expense where death benefit proceeds from life insurance can help.

Mental support

Should you pass away, your family may face a difficult adjustment period, emotionally and financially. Life insurance can help make that process a little easier by helping pay for such things as grief counseling. It can allow your partner to take time off.

Cost of final expenses

The price of a funeral can be very expensive. According to the National Funeral Directors Association, the median cost is $7,848. A life insurance policy can help your family pay for funeral arrangements and other related expenses required to lay you to rest. Not having to worry about money for your final expenses can help make things easier for your grieving family.

Inheritance

With a life insurance policy, you can not only set aside money for your children to help them carry on when you pass but also aid them in the future. Leaving your beneficiaries money can go a long way toward helping your loved ones pay for something like higher education down the road.

What types of life insurance are available?

The type and amount of life insurance needed as a stay-at-home parent depends on your personal situation. Some factors to consider may include:

• Home services for your partner. These might include outsourced services for housekeeping, grocery shopping, cooking, transportation, etc.
• Cost of full or part-time child care in your area if needed.
• Types of life insurance available, how much they cost, and your budget constraints. Some options include:
• Term life insurance –Term life insurance is typically the least expensive. It provides death benefit protection for a specific period, typically 10, 20, or 30 years as long as the premiums are paid.
• Permanent life insurance – Permanent life insurance offers lifetime coverage and some offer the potential to build cash value, as long as premiums are paid.

If you want to protect the people you love, life insurance should be an important part of your financial planning. It can provide a meaningful amount of money to your family, give you a way to leave a legacy, and much more.

What are some uses for life insurance?

The main benefit of a life insurance policy is to provide a death benefit to beneficiaries should you pass on. There may be a variety of advantages to the life insurance policy you choose, such as coverage for final expenses and growing your retirement savings. Here are some features you may be overlooking.

Living benefits

Some products include accelerated death benefits, which allow you to accelerate a portion of the death benefit while living, if you should be diagnosed with a qualifying illness. These benefits are subject to eligibility requirements. The funds can be used toward medical bills or any use of your choosing.

Coverage for final expenses

The national median cost for a funeral could end up costing thousands of dollars. One of the biggest costs for your family when you die is your funeral. You may leave behind end-of-life expenses such as medical bills, which will fall on the shoulders of your loved ones. Life insurance can help prevent that kind of financial and emotional strain on your family by covering the cost of your burial and other expenses.

Retirement savings

Whether you started retirement planning too late, or you worry you simply won’t have enough retirement income to meet your needs in your later years, life insurance can help supplement your retirement income with policies that feature cash value growth potential. You can access cash value through policy loans or withdrawals and the money could be used for a generally tax-free income stream.

Funds for your child’s college

Did you know that life insurance can be a great college funding solution? With permanent life insurance, you can protect your family and build college savings at the same time. With permanent life insurance, you have the opportunity to grow cash value by taking advantage of indices that are linked to the stock market when the market is high subject to a cap, while protecting yourself from loss when the market is low with a 0% floor. You can then use the cash value that you may accumulate over time to help pay college tuition costs, whether it’s an in-state or out-of-state college.

Business planning

Are you aware of the role life insurance can play in business planning? Whether you’re an entrepreneur thinking about how to protect your share of the business or are looking for ways to reward your top performers, life insurance could be a solution.

Talk to an agent to help

If you want to get up to speed on all the options available in your life insurance, consider making an appointment with an agent to discuss your policy today.

from North American, a Sammons Financial Company

North American Company gives these tips on reviewing your life insurance policy.

Your life insurance policy can offer assurance and stability for your family should you pass away. But that policy needs to be revised and updated from time to time, especially when a life-changing experience occurs. Review your policy if one of the following events occurs.

Having a child

A new baby is likely a signal that it’s time to review your life insurance policy. Likely, this bundle of joy means a new dependent and your life insurance policy may need updating to account for this.

Getting married or divorced

If you’ve recently tied the knot or gone through a divorce, it’s probably a safe bet that you need to review your policy. Marriage means you could be sharing finances. If you pool your money together and start sharing accounts, it’s good to make sure your policy adequately covers your husband or wife, should you pass away. Similarly, a divorce probably means you’ll be going through a number of financial changes.

Here are some important insurance actions to consider:

Update your beneficiaries

A beneficiary is the person, business, or trust that receives the death benefit proceeds from your life insurance coverage when you’re gone. It’s likely that the person you’ll want to be listed as your beneficiary, depending on your life insurance policy, is your spouse. If you have life insurance coverage through work, remember to update your beneficiary on that policy as well.

Update your retirement accounts

Retirement accounts like IRAs and Roth IRAs, workplace retirement plans such as your Pension, 401(k) or 403(b), and FSA and HSA Flexible spending accounts allow you to designate a beneficiary who will inherit the account should you die.

Purchasing a home

If you’re planning to purchase a home and take out a mortgage you may want to take a look at your life insurance policy. Buying a home may be one of your biggest financial obligations. A life insurance policy can be smart financial protection for homeowners. A mortgage can be a substantial debt, and many mortgage lenders will want to ensure it gets paid even if you pass. If you die before paying off the mortgage, the debt will pass on to your family, and your spouse may not be able to afford to pay for the house on one income. With all of these factors to consider, it may be time to make an update or change to your life insurance policy. Options include:

Term life insurance

Term life insurance pays a death benefit if you die while the policy is in effect. You choose the coverage amount and how many years the policy should last. Most life insurance companies sell term life. New homeowners can buy a term life insurance policy timed to match the duration of their mortgage.

Permanent life insurance

A permanent life insurance policy can last until you die if premium requirements are met. It can also build cash value over time and is generally is more expensive than term life insurance.

Talk to a financial professional about how buying a home could affect your life insurance needs.

Planning for retirement

If you are approaching retirement age but think you don’t have enough saved, you may be exploring your options. One consideration is how life insurance can play a role in your retirement plan. This, as you’ve probably guessed, means you should consider contacting your life insurance agent to talk about a current policy you may have.

A life insurance policy’s primary objective is to pay a death benefit to your beneficiaries upon your death. You may be able to use the cash value in the life insurance plan to supplement income in retirement.

Often, life insurance can fall into the category of out of sight, out of mind; you purchase a policy and call it good. Resist the urge – review your life insurance policy should you experience any of these life events.

Change in employment

Having a change in employment, whether a new job or promotion, is also an opportunity to revisit your policy and possibly update your life insurance plan. Whether an increase or decrease in household income, the change can affect living standards.

Providing care for loved ones

If you function as a primary caregiver to a loved one, review your life insurance to make changes for their benefit. If you leave a young child behind, your spouse may need to work full-time to pay the bills. This often means paying for child care. Other costs might include cleaning the house regularly or shopping for groceries. Additionally, if you are a caregiver for an elder relative you should consider the financial value of the support you are providing.

Caregivers often have a significant amount of out-of-pocket expenses. According to the AARP, a majority of family caregivers report that they spend an average of over $7,000 annually in out-of-pocket costs related to caregiving needs.¹ Should something happen to you, those expenses may still need to be covered. Life insurance can help provide for those costs.

To provide for others, it’s vital that you care for yourself emotionally and physically. But in case something does happen to you, a life insurance death benefit can help the beneficiary financially.

A change in your health

If you’ve become healthier through exercise or changed your habits in a way that significantly impacts your health, you could qualify for new life insurance rates. Lowering your blood pressure, giving up tobacco, or having surgery to reduce weight or rectify medical issues are examples of changes that might alter your health. Should you experience any of these changes, you may want to explore your policy options.

Talk to your agent

If you’ve experienced a change like this, or aren’t sure if it’s time to review your policy, contact your agent. He or she can help you better understand how your changes in life might mean a change in your policy.

We can assist you in your life insurance needs. Contact us at [email protected] or 817.545.3900.

American consumers’ top three financial concerns are health coverage, savings goals, and living expenses.¹ What if we told you their fourth financial concern, life insurance, had the potential to solve for the first three?

Let’s take a look at some reasons to LOVE life insurance and what it could do for you.

L – Low cost

Many don’t realize that life insurance doesn’t have to break the bank—there’s a policy out there that can fit your financial situation. Did you know, that for the price of three cups of coffee per month, you could buy a term life insurance policy?² While affordability is important when considering life insurance, it’s also important to look beyond the price. What benefits does this policy include? How can it help me financially in the long term?

O – Options

That’s why a policy with flexibility can be important. We know our clients have individual needs and financial goals. And, as your life changes, your needs may change as well. Many life insurance policies have different features such as living benefits, cash value growth potential, and benefits you can use while you’re alive that may fit your unique life needs.

V – Various life stages

As you go through the different stages of life, your financial needs and goals can change. Whether you’re graduating college, getting married, buying a house, starting a family, or planning for retirement, all of these momentous occasions require more financial responsibility. Life insurance can walk alongside life with you and help you during these special milestones.

E – Extra protection

Studies of cancer survivors have suggested that between 33% and 80% of the survivors have used savings to finance medical expenses and between 2% and 34% have borrowed money to pay for their care or have medical debt.³ While the main benefit of life insurance is the invaluable death benefit protection it provides, many policies also come with living benefits, which may be used for a variety of expenses—including covering the costs of a major medical illness.

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¹Source: 2019 Insurance Barometer Report, LIMRA. Accessed January 2020.

²Source: LifeHappens, lifehappens.org/insurance-overview/life-insurance/. Accessed January 2020.

³Source: “Financial Toxicity and Cancer Treatment–Health Professional Version” National Cancer Institute, June 22, 2021

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