Posts Taged life-insurance

How to Budget for Life Insurance

Setting yourself up for the likelihood of long-term financial success involves thinking through plans to protect your family and assets even if something were to happen to you. Life insurance is often part of the long-term planning puzzle, but can look different for individuals and their families.

If you’re evaluating your life insurance options and wondering how to fit a policy for yourself, your spouse, and/or other family members into the picture, read on to learn more about some of your options.

Evaluate Your Coverage Needs

The first place to start when planning for life insurance is by taking a look at your current needs. After all, you can’t know how much life insurance you need or which policies will fit into your plans until you know what you want to have covered.

For many, this means taking a look at likely expenses you’ll encounter in the event of your (or a loved one’s) passing. These include things like a funeral and other arrangement expenses, as well as debt repayment and income replacement needs

You’ll also want to take some time to check over your existing monthly expenditures to see how covering your premiums might play into your short- and long-term financial plans. Remember, the more coverage you opt for, the more you’ll pay on your insurance premiums. However, most families find that the peace of mind from having a robust life insurance plan in place is worth any temporary financial inconvenience.

Understand Your Coverage Options

After reviewing your coverage needs, you will want to take time to understand how your life insurance will work for you. Here are some basics to consider:

  • Choosing beneficiaries: When you establish your life insurance plan, you’ll need to choose beneficiaries to receive payout upon your passing. Typically, this includes your spouse and children.
  • Whole life and term life insurance: These are two of the more popular options for life insurance coverage. Whole life insurance covers you throughout your life and accrues cash value as you invest, while term life insurance covers you during the coverage term and may be converted to whole life insurance at the end of the policy’s term.
  • Return of premium policy: This type of life insurance policy provides the typical benefits of life insurance coverage with a payout of your invested premium payments throughout the life of your policy. Choosing a return of premium policy can play into your overall estate planning strategy and benefit for your loved ones in the long-term.

Review Your Financial Goals

Your life insurance policy coverage should play into your overall financial goal setting. When viewed as part of your financial action plan, life insurance is an important tool that can help you get closer to your desired financial future. Talk to your financial advisor about your coverage options and what level of coverage might be a good fit for your specific situation.

There are multiple variables to consider when browsing life insurance policies, from term to permanent policies and convertible options. Thankfully, you don’t need to be an expert in discerning the differences from policy to policy when you have a trusted financial advisor on your side.

If you have questions about preparing your financial plan and whether life insurance should be a part of this equation, contact Puckett & Sturgill Financial Group for a discovery consultation today! We can help you work through questions related to life insurance and related long-term financial planning needs.

How Much Life Insurance Coverage do I Need?

Finding the right fit between a life insurance policy and your lifestyle can be an important part of preparing for your financial future. But trying to sift through policies by type, coverage, and monthly expense can be a challenge.

If you’re in the market for life insurance or are looking to expand your personal coverage, ask yourself the following questions to get a better feel for the coverage may be a good fit for you.

Do I Actually Need Life Insurance?

Without looking at every factor, there is no way to definitively say whether life insurance is something you do or don’t need. But, as with most financial products, there are certain individuals for whom life insurance is more ideal.

If you have dependents and want to ensure their financial protection in the event of your passing, you may wish to consider how a life insurance policy could benefit your financial plans. Life insurance can cover the expenses associated with a funeral and other arrangements, as well as cover family debts and provide a helpful payout for your dependents.

On the other hand, if you don’t have dependents or are otherwise financially prepared to cover expenses in the event of your passing, you may not need to worry about adding life insurance coverage to your financial planning.

What do I Need to Cover?

To determine the value you need from your life insurance policy, you need to know what expenses you need to cover after your death. These may include:

  • Funeral expenses – Funeral expenses and other arrangements can easily top out in the tens of thousands of dollars. You don’t want to leave your family in the lurch with trying to cover these emotional expenses out of pocket.
  • Debt coverage – After your passing, you will want your life insurance coverage to cover your debts in full. Depending on your age and lifestyle, you may have tens to hundreds of thousands of dollars of debt to pay off. Take into account factors like your mortgage, auto loans, student loans, and credit card debt when you tally your debt coverage to achieve your minimum life insurance coverage figure.
  • Income replacement – If you are your family’s primary provider and have dependents to care for, it’s important to factor the loss of your income into your life insurance coverage figure. To achieve a ballpark figure for income replacement, multiply your yearly salary by ten years and use this number as a base for your income replacement. For example, if you make $50,000 yearly, you would want a minimum of $500,000 in life insurance coverage as income replacement.

Finally, add these figures together to discover your minimum coverage needs. For the individual with $300,000 in debt, requiring a $500,000 income replacement, and a funeral expense cushion of $20,000, the minimum life insurance coverage they’d need would be $820,000.

How Can I Determine which Plan is a Good Fit?

Finding a life insurance policy, or combination of policies, that meets your future needs and stays within your budget will likely take some careful research. Depending on your age, health, and income, you may have certain limits on the coverage for which you qualify.

Your financial advisor can help you put the pieces together to determine which life insurance policy(ies) make sense for your current lifestyle and future financial goals. To learn more about long-term financial planning, contact Jacob Sturgill for an initial consultation and personalized long-term planning roadmap.

Are You Covered? Checking in with Your Personal Insurance Needs

When you think about planning for your future, a lot of times you may be thinking long-term toward retirement or some other big financial goal. But short-term financial planning is important too.

One way to keep your current needs in mind is to consider your lifestyle and whether your insurance status aligns with your short-term needs. Sure, you probably review your auto insurance plan at least once a year, but what of your other policies?

Take a few minutes to consult this insurance checklist and ensure that you’re on the right path for meeting your (and your family’s) insurance needs for short-term protection and confidence.

1. Have Your Coverage Needs Changed?

As you go through life transitions and even as policies update from year to year, you may find that your coverage needs have changed since you last reviewed your insurance needs. Check in with your health, life, and homeowners insurance policies to determine whether they are adequate for your current lifestyle.

Don’t forget to account for major life changes, like births, deaths, or retirement, since these can impact the coverage amounts you require. Ultimately, keeping your policies in line can save you money on your monthly payments (if you find you have too much coverage in one or more areas) or will provide a more adequate amount of coverage for you and your family members (if your lifestyle has changed significantly since your last review).

2. Are Your Beneficiaries Up-to-Date?

In addition to checking whether your coverage is up-to-date, you will want to take a moment to review your beneficiaries listed on your policies. This is especially important if you’ve recently added a new family member who might not have made it onto your insurance plan(s) yet.

You also should check whether your beneficiary information is correct. If you have adult children, make sure that their names and addresses listed correctly, since their major life events, like marriage and moves, can require a quick policy update.

3. What Policies Might be Missing?

Are you covered in all of the areas that you need to ensure your family’s security? If you’re recently married or have a growing family, perhaps now is the time to consider that life insurance policy you’ve been putting off. Or maybe it’s time to consider extending your disability coverage or natural disaster protection for your home.

Talk to your financial advisor about how to best cover your lifestyle and protect your family’s assets in the event of an unexpected illness or disaster. You may be surprised at how your coverage needs differ from the coverage you already have.

4. Do You Have Policies You No Longer Need?

On the flip side, you may be paying toward insurance coverage that you don’t really need anymore. Perhaps your life insurance policy carries far more coverage than you and your empty nesting spouse really need. Maybe your asset protection policies cover items you no longer own or use. If you’re insurance coverage exceeds your needs, talk to your financial advisor about amending policies or removing coverage to better reflect your lifestyle needs.

5. Do I Need Help Managing My Personal Coverage Needs?

It can be a big task to sift through your insurance paperwork to determine which policies you have, what your coverage amounts are, and whether these are relevant to your lifestyle and future financial goals. But the good news is that you need not work through these tasks alone.

Talk to a trusted financial professional, like Jacob Sturgill who can help you to work through your lifestyle needs and determine whether you’re on track to meet your personal and family needs. If you’d like to connect with an advisor who will take the time to get to know you personally and develop a customized financial plan, contact Puckett & Sturgill Financial Group today to schedule a consultation.