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Archive for the ‘Life Annuities’ Category

Why use a life insurance agency when looking for a life insurance policy to purchase for you or a loved one?

There are many perks to using an insurance agency when looking for an insurance company. Instead of contacting each and every life insurance company whom provides for what you are looking, an insurance agency will have an agent who, after asking a series of routine questions, assesses your life insurance needs and wants and offer you a quote in minutes.

Once you have selected a quote or two from companies you know and trust, the agent will then ask more detailed, company-specific questions in order to submit an application on your behalf.

The insurance agent will then continue to correspond with you throughout the process from selecting a policy to the initial doctor’s appointments and health exam, if required through to the underwriting of the policy and the first insurance premium payment.

The services offered by insurance agencies are free of charge to clients. They offer support, unbiased advice when asked for it, and submit much of the paperwork for you. They are the go-betweens for clients and the insurance companies. Life insurance agencies are like the customer service department for many of the insurance companies. They are paid according to how many clients they send each particular company. They speak the language of the individuals with whom they must speak in order accomplish what needs to be done for the person seeking to be insured.

Choosing an insurance agency is a must for great service, dependability, and getting the job done.

From start to finish, an experience insurance agent will be like a dream and make obtaining a life insurance policy a breeze for you. Their daily profession is to hook people like you and me with the company and policy that best suits you needs. From my own personal experience, I highly recommend using a reputable company. Your agent will let you know what documents are needed, if any, and what the next step is toward completion.

Finding a reputable life insurance agency is not a difficult task. Many advertise in very visible places. A great place to start is the internet, either via search or by chance, you are bound to find one who will do the job and do right. The timeframe for the process varies. But finding the right insurance policy does not have to be a daunting task!

This is a question every client will ask me. Truth is that there isn’t an easy answer. People need life insurance for many reasons, income replacement, to pay debts, educate their children, fund a buy/sell agreement, insure a bank loan, and the list continues. I will discuss in detail an exercise I use for all of my clients, but please understand this is just an example. I encourage you to seek the advice of an experienced life insurance professional to help determine your specific needs.

THE “NOW BUDGET”

In my world there are only two types of dollars; dollars we save and dollars we spend. If we’re not saving for retirement or education, then by default we are spending. A lot of clients mention that they are saving for a new house, new car or a vacation, but this is a form of deferred spending. It is crucial to determine how much we are spending, because typically in the event of a death the surviving spouse will still need a majority of this income to continue their style of living and retire comfortably.

The “Now Budget” is simply your gross income minus anything you save pre tax for retirement, minus taxes, minus anything you save post tax for retirement or education (see paragraph below for example). The number that is left is actually what you spend on an annual basis. This is enlightening for my clients because a majority of them don’t have any idea what they spend on an annual or monthly basis. (Not only is this the amount the surviving spouse will need in the event of a premature death but also serves as the cornerstone for retirement planning.) I know through years of analysis that $200,000 of life insurance is needed for every thousand dollars of monthly income that needs to be replaced.

For example, a husband and wife each make $100,000, they each contribute 6% of their income into their 401(K), and they save $500/month into education accounts for their children. They don’t have any additional savings going towards retirement or education. Let’s assume their effective tax rate is 25%.
Below is the Math:

$100,000 + $100,000 = $200,000 Gross Income
$200,000 – $12,000 (6% Pre-Tax contributions) = $188,000 Taxable Income
$188,000 * 75% (25% effective tax rate) = $141,000 After Tax Annual Dollars
$141,000 – $6,000 ($500/month education saving) = $135,000 Annual Dollars Spent
$135,000 / 12 months = $11,250 Monthly Dollars Spent
$11,250 / 2 = $5,625 Income that needs to be replaced in the event of a premature death.
$5,625 * $200,000 (Life Insurance per thousand dollars needed to replace) = $1,125,000 Life Insurance

In this example, the surviving spouse would receive a lump sum tax-free death benefit of $1,125,000. With a conservative rate of return and withdrawals to replace lost income, the money will last 20 years

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