0 5 Steps to Make Sure Your Family Is Protected Financially

5 Steps to Make Sure Your Family Is Protected Financially

Have you ever thought about what would happen to your family if something happened to you? All of us have at one point or another, even if it was in the form a frantic mental love note sent to family members during bad airplane turbulence. But concern for protecting your family financially doesn’t have to turn to worry if you follow these steps.

1. Take a look at what financial security means for you. Just as “rich” means different things to different people, so does financial security. Start by asking yourself what would happen if the primary breadwinner died prematurely (that could be you or your spouse or partner). You’d want your loved ones to be OK financially, but does that mean having enough income … for a lifetime? … so they wouldn’t need to move out of your home and neighborhood? … enough money for your spouse or partner to transition to a job if they are a stay-at-home parent? … to provide for your kids through college or maybe just a portion and have them pay the rest? Once you’ve established that, you can move on to making sure a plan is in place.

2. Determine needs versus wants. They are not the same thing. You may want 100% financial securityâ€"to provide for your spouse for their lifetime and your kids through college, but can you afford it? Most of us don’t have savings to achieve this, which is where life insurance comes in. You’ll want enough money or death benefit that if invested at the current market rates (2%-4%) that you can generate your (or your spouse’s) missing income. That means you may need more life insurance than in the past. Before, the invested proceeds of $500,000 life insurance benefit could have replaced, a $50,000/year salary. Now you might need $1 million of coverage to achieve the same goal.

3. Look at the full picture. This isn’t just about life insuranceâ€"that’s just one piece of the formula. You need to look at all your assets such as money in retirement plans, your benefits packages, investments you might have, what money your family would be getting from Social Security, the life insurance you already have in place, etc.

In addition, people often have multiple families to care for with economic requirements that may be laid out in a divorce decree. Or they may have special needs children who will never be able to work. In that situation, a trust should be set upâ€"funded with assets or death benefitsâ€"to create an income stream for as long as they live. Plus, many of us will have either adult children or our aging parents living with us now or in the future who we may be responsible for financially.

Once you have these numbers, you can figure out what the shortfall isâ€"which can be funded with life insurance or more life insurance that you currently have. This doesn’t have to be a particularly difficult task to start. Use this online Life Insurance Needs Calculator, which has inputs for this type of information and can help you get a working idea of how much life insurance you might need to cover any shortfall.

4. Get help if you need it. Sometimes our need for life insurance is straightforward. Often, though, when we need to factor in special circumstances it can become more complicated. Insurance agents are there to help. That’s their job. They will sit down with you, at no cost or obligation, and go through these steps with you and then help you come up with a solution you can afford. You may “want” a permanent life insurance policy to secure your family’s financial future, but an agent may show you that what you “need” is really a term life insurance policy that you can afford without straining your budget or perhaps it is a combination of the two. If you don’t currently have an agent to work with, you can start with tips on finding one and our Agent Locator.

5. Don’t forget about disability insurance. If you and your family depend on your income, then you need to make sure you have disability insurance. Ask yourself honestly if you were sick or injured and unable to work, how long could you survive financially without your paycheck? In a survey that Life Happens did we found that most Americans would feel the pinch in a month or less. Keep in mind that Social Security pays disability benefits that average around $1,100 a month, and it can take a yearâ€"often much longerâ€"to even get that payment.

Disability insurance pays you a portion of your income if you become sick or injured and unable to work. It may be offered as part of your benefits package through work, but be sure to double check with your HR department, and find out what percentage of your income is replaced (often 60% or less). You can also purchase an individual policy, which you own, and so isn’t dependent on your benefits package being reduced or even eliminated. To get a working idea of how much you might need, you can use this Disability Insurance Needs Calculator. Again, this is something that an insurance agent can help you figure out as well.

0 Are You Paying the Kiddie Tax?

Are You Paying the Kiddie Tax?

The kiddie tax is a tax rule that is levied on unearned income (interest, dividends and capital gains) earned by children under the age of 19 and full-time college students under the age of 24. For 2016, all of the child’s unearned income in excess of $2,100 is taxed at the parent’s tax rate.

In 2016, the only way that college students under age 24 will be able to avoid the kiddie tax is if they provide over half of their own support from their own earned income (i.e., wages and salaries, not income from selling stocks) in which case the child’s unearned income would be based on the child’s tax rates, not the parents rates under the kiddie tax rules.

So, is there a way to avoid paying this tax? Yes, there are several ways including using 529 plans and life insurance. Life insurance you say? Yes, and it works well.

Permanent life insurance allows you to put away funds in the cash-value portion of the policy, which accumulate tax deferred until they are withdrawn or borrowed from the policy. The rates of return over a 15 to 20 year period can be better than other safe money investments equivalents such as CDs and money markets and, there is no current taxation.

Want to learn more? Contact your agent or financial advisor for details.

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0 6 Reasons Single People May Need Life Insurance

6 Reasons Single People May Need Life Insurance

Many people make the assumption that life insurance is for married couples and those with kids. While it is true that not all single people need life insurance, there are a number of reasons when it can make (really) good sense.

1. You have student loan debt. Many people assume that your debt dies with you, but that’s not always the case. While the loans through the federal government are discharged (aka forgiven) if you were to die, personal loans that have a cosigner are generally not. That means if your parents, for example, co-signed your student loan through a bank, they would be responsible for paying the rest of the loan if something happened to you. There are instances when the bank has called for the loan to be paid in full immediately following a death. You don’t want to leave your parents dealing with grief and loan payments.

2. You’re living with your significant other. When you’re living together, a lot becomes shared financial responsibility. Consider this example: You need both your incomes to meet the mortgage or rent where you’re living. Have you thought about what happens if one of you dies prematurely? Would the other partner have to sell up? Find a new place to live immediately? And this is just one example of many shared financial responsibilities couple have. Adequate life insurance is an easy answer to those questions.

If your parents co-signed your student loan through a bank, they’d be responsible for paying the rest of the loan if something happened to you.

3. You plan on having kids … someday. It may not be now, but when kids do come, so do the expenses and bills. According the USDA, it costs $245,340 to raise a child to age 18, and that’s without factoring in the cost of college. Getting life insurance in place now means you have coverage in place for when you do have a child. Plus, you protect your insurability for the future. … and that leads us to the next reason.

4. You’re young and healthy. Age and health are two major drivers of how much you’ll be paying for life insurance. Why not lock in a low price if you have both of those working for you? Did you know that a health 30-year-old can get a 20-year $250,000 term life insurance policy for about $13 a month? Doable, right? Don’t wait until a health issue or age puts life insurance out of your reach.

5. You know you’ll be taking care of family members in the future. This may mean aging parents or perhaps you have a special-needs sibling that you help care for and support financially. What would happen to them if something happened to you and your support disappeared? Life insurance can ensure that there is money in place to fund those needs into the future. This is where it might be wise to consider a permanent life insurance policy (one that’s there for your lifetime, as long as you pay your premiums).

6. It will pay for your funeral. No one likes to think about such things, but the truth is if you die, someone will have to pay for your funeral. You wouldn’t want to leave your parents, partner or other family members struggling with grief as well as paying for a funeral and burial, which can cost an average of $7,100.

Getting life insurance doesn’t have to be a daunting task. A life insurance agent can walk you through your optionsâ€"free of charge. If you don’t have an agent to work with, click here for information on finding the right fit and one in your area.

0 On the Road to Recovery Thanks to Disability Insurance

On the Road to Recovery Thanks to Disability Insurance

At 26, Michael Sizemore was living two of his dreams. Ever the athlete, he was training to participate in his first marathon. And he was enjoying his new position advocating for the unemployed and disadvantaged in his community through the nonprofit organization where he worked. After years of study and earning his master’s degree in public administration, he felt prepared to start his life’s mission of helping others.

Both those dreams came crashing down around him one night while he was out with friends. As they were walking across the street, a drunk driver ran a red light at high speed and hit Michael.

His injuries were so severe, including major head trauma, that doctors were unsure if he would survive. He was placed in an induced coma and his parents rushed to his side. There were countless surgeries to treat his head injuries, repair his shattered legs and address the multitude of other injuries he suffered.

Watch his story:

Disability Insurance Makes the Difference
Through strength, determination and a lot of rehabilitation, Michael is improving every day, including being able to walk again. But during the three years it has taken, he has been unable to return to work. Instead, he has relied on the long-term disability insurance he had through work, which agent Jimmy Jacobs had helped his employer put in place. With it, he’s been able to pay his rent and utilities, and afford to keep his truck.

While his life will never be as it was before, Michael is hopeful that he’ll be able to work again soon. And he credits his disability insurance with helping him get there. “I’m still rebuilding my life and myself,” he says. “My disability insurance has been key. I wouldn’t be where I am without it.”

0 Life Happens

Life Happens Life Happens is a nonprofit organization dedicated to helping consumers make smart insurance decisions to safeguard their families’ financial futures.

0 Are You Paying the Kiddie Tax?

Are You Paying the Kiddie Tax?

The kiddie tax is a tax rule that is levied on unearned income (interest, dividends and capital gains) earned by children under the age of 19 and full-time college students under the age of 24. For 2016, all of the child’s unearned income in excess of $2,100 is taxed at the parent’s tax rate.

In 2016, the only way that college students under age 24 will be able to avoid the kiddie tax is if they provide over half of their own support from their own earned income (i.e., wages and salaries, not income from selling stocks) in which case the child’s unearned income would be based on the child’s tax rates, not the parents rates under the kiddie tax rules.

So, is there a way to avoid paying this tax? Yes, there are several ways including using 529 plans and life insurance. Life insurance you say? Yes, and it works well.

Permanent life insurance allows you to put away funds in the cash-value portion of the policy, which accumulate tax deferred until they are withdrawn or borrowed from the policy. The rates of return over a 15 to 20 year period can be better than other safe money investments equivalents such as CDs and money markets and, there is no current taxation.

Want to learn more? Contact your agent or financial advisor for details.

Share: email twitter facebook googleplus pinterest linkedin

0 5 Steps to Make Sure Your Family Is Protected Financially

5 Steps to Make Sure Your Family Is Protected Financially

Have you ever thought about what would happen to your family if something happened to you? All of us have at one point or another, even if it was in the form a frantic mental love note sent to family members during bad airplane turbulence. But concern for protecting your family financially doesn’t have to turn to worry if you follow these steps.

1. Take a look at what financial security means for you. Just as “rich” means different things to different people, so does financial security. Start by asking yourself what would happen if the primary breadwinner died prematurely (that could be you or your spouse or partner). You’d want your loved ones to be OK financially, but does that mean having enough income … for a lifetime? … so they wouldn’t need to move out of your home and neighborhood? … enough money for your spouse or partner to transition to a job if they are a stay-at-home parent? … to provide for your kids through college or maybe just a portion and have them pay the rest? Once you’ve established that, you can move on to making sure a plan is in place.

2. Determine needs versus wants. They are not the same thing. You may want 100% financial securityâ€"to provide for your spouse for their lifetime and your kids through college, but can you afford it? Most of us don’t have savings to achieve this, which is where life insurance comes in. You’ll want enough money or death benefit that if invested at the current market rates (2%-4%) that you can generate your (or your spouse’s) missing income. That means you may need more life insurance than in the past. Before, the invested proceeds of $500,000 life insurance benefit could have replaced, a $50,000/year salary. Now you might need $1 million of coverage to achieve the same goal.

3. Look at the full picture. This isn’t just about life insuranceâ€"that’s just one piece of the formula. You need to look at all your assets such as money in retirement plans, your benefits packages, investments you might have, what money your family would be getting from Social Security, the life insurance you already have in place, etc.

In addition, people often have multiple families to care for with economic requirements that may be laid out in a divorce decree. Or they may have special needs children who will never be able to work. In that situation, a trust should be set upâ€"funded with assets or death benefitsâ€"to create an income stream for as long as they live. Plus, many of us will have either adult children or our aging parents living with us now or in the future who we may be responsible for financially.

Once you have these numbers, you can figure out what the shortfall isâ€"which can be funded with life insurance or more life insurance that you currently have. This doesn’t have to be a particularly difficult task to start. Use this online Life Insurance Needs Calculator, which has inputs for this type of information and can help you get a working idea of how much life insurance you might need to cover any shortfall.

4. Get help if you need it. Sometimes our need for life insurance is straightforward. Often, though, when we need to factor in special circumstances it can become more complicated. Insurance agents are there to help. That’s their job. They will sit down with you, at no cost or obligation, and go through these steps with you and then help you come up with a solution you can afford. You may “want” a permanent life insurance policy to secure your family’s financial future, but an agent may show you that what you “need” is really a term life insurance policy that you can afford without straining your budget or perhaps it is a combination of the two. If you don’t currently have an agent to work with, you can start with tips on finding one and our Agent Locator.

5. Don’t forget about disability insurance. If you and your family depend on your income, then you need to make sure you have disability insurance. Ask yourself honestly if you were sick or injured and unable to work, how long could you survive financially without your paycheck? In a survey that Life Happens did we found that most Americans would feel the pinch in a month or less. Keep in mind that Social Security pays disability benefits that average around $1,100 a month, and it can take a yearâ€"often much longerâ€"to even get that payment.

Disability insurance pays you a portion of your income if you become sick or injured and unable to work. It may be offered as part of your benefits package through work, but be sure to double check with your HR department, and find out what percentage of your income is replaced (often 60% or less). You can also purchase an individual policy, which you own, and so isn’t dependent on your benefits package being reduced or even eliminated. To get a working idea of how much you might need, you can use this Disability Insurance Needs Calculator. Again, this is something that an insurance agent can help you figure out as well.