Life Insurance Explained
What To Insure: Life Insurance Replaces Income
But, there’s more than one kind of income. To decide whether you need life insurance, think about what needs to be replaced if you or your spouse dies. The easiest answer is a paycheck, the money you and/or your partner earn working outside the home, but there’s more to it than that.
Dual Income Couples
If you both make about the same amount of money and you don’t have kids, then the only lifestyle that insurance would protect is your own. After that, it gets more complicated.
Single Income Families
If only one partner is working, then replacing the income of the working person is fairly easy to calculate. But what if the spouse who works in the home dies? Childcare, home cleaning and repair, and the laundry all still need to be done, and these services bring an ongoing cost. Insuring the stay-at-home spouse insures your family’s lifestyle.
Dual Income Families
Resist the urge to fall into the “my spouse has a great job” trap. All those childcare and home maintenance costs count in this situation too. Plus, odds are, you counted on both incomes to make your monthly mortgage payment, heat the place, and turn on the lights every night.
How To Insure It
Term life insurance runs for a set period of time, such as, until your youngest child is 21 years old. It’s inexpensive, and offers the greatest amount of coverage for least amount of dollars. Premiums stay the same for the term of the policy. At the end of the term, if you need to buy another policy, the premiums will go up. No benefits are paid unless the person insured dies during the term of the policy.
Permanent or Cash Value Insurance
The essential difference between term insurance and cash value insurance is that cash value insurance is usually designed to stay in force permanently (until you’re 95 or 100 years old), typically for your whole life. The premiums are set when you buy the product, and they don’t change. The industry uses lots of names for cash value policies: Whole Life, Universal Life, and Variable Life.
Cash value policies are typically more expensive than term, but that’s because, if they’re properly designed, they can do more for you than just provide a death benefit. Cash value policies can be used as:
A Retirement Supplement
To Pay Off Debts
To Pay Off Your Mortgage
As An Education Fund
Long Term Care
Is Your Life Insurance Working Hard Enough?
Is Your Life Insurance Working Hard Enough? If your cash value policy was issued more than seven years ago, there could be dramatic improvements in coverage that could affect you.
Maximize Your Pension Dollars
Preparing for retirement takes time and careful planning. There will be many decisions that will need to be made. Many of us may be retired for longer than we actually worked. We should enjoy our “free time” and fill it with the things we always wanted to do. However, if you have been covered under a traditional “defined benefit” pension plan, you may have to make one of the biggest and perhaps costliest decisions of your life.
Most employees that are covered under a defined benefit pension plan will be given two options from their employer prior to retirement. The options seem pretty straight forward; Single pay or a joint and survivor payout. With the single pay option, the employee receives a monthly benefit for as long as he/she lives. Upon death, the payments stop. With a joint and survivor options, the employee takes a lessor amount but upon death of the employee the spouse continues to receive the same benefit. Sounds easy but let’s take a closer look.
Assume you are about to retire at age 65, and your spouse is age 62. Your pension plan gives you the option of either a single-life or a joint and survivor. If you select the single-life option, you will receive $4,500 per month for the rest of your life, but your spouse will receive nothing if you die first. If you select the joint and survivor, you and/or your spouse will receive $3,000 per month as long at least one of you is alive. That’s an additional $1,500 per month (or $18,000 per year)than with the single-life option. That sounds attractive, but what will happen to your spouse if you select the single-life option and you die before your spouse? Your spouse gets no survivor benefit. Your spouse may need a way of replacing that lost pension income. One way to accomplish this may be to purchase a life insurance policy on your life, and name your spouse as the beneficiary of the policy. You need to determine whether the extra $1,500 per month under the single-life option (less income taxes) will buy enough insurance coverage to produce a replacement income of $3,000 per month if you die before your spouse.
Using the same scenario, let’s assume your spouse predeceases you. If you chose the joint and survivor annuity option you will now have a monthly retirement benefit that is $1500 less. There is no way to reverse your decision. However, if you had chosen the single –life option and had purchased the life insurance you’d have a few more options. Cancel the policy, putting the $1500 back into your pocket as well as any cash value that may have accumulated. Continue the policy for your heirs or any beneficiary you choose. Often you can keep the policy or a portion of it without paying any additional premiums.
Our Process Finds the Right Health Plan: How We Do It?
If you think this can’t hang in your car.
Think About It
You’re 7 times more likely to need it during your working years than your life insurance coverage.
You’re insuring yourself and your family — everyone who depends on your income — with one simple
Disability coverage is very inexpensive — pennies per thousand dollars of income protected.
Call Us – We’ll Take Care of the Rest
Contact us today at 414.573.8555 for a consultation specifically designed for you.
Whether you’re a business owner, or self-employed, we’ll show you a plan to help preserve income, shelter your family, protect assets, and keep your business in business, no matter what.
Disability Insurance For Individuals
You see the importance of protecting your ability to earn an income; we can help with one of our very competitively priced group disability contracts.
Disability Insurance For Business Owners
You want to protect both your independence and profitability. Choose from personal and business disability insurance products designed with you in mind.
Disability Insurance For Professionals
You’ve invested a lifetime in developing your skills and livelihood. We have personal and business products to protect your investment and meet your individual needs.
Good Checkups Mean Good Health
Dental health affects some of the body’s most essential functions, including speaking, chewing and swallowing.
Studies have indicated relationships between periodontal diseases and systemic illnesses, such as cardiovascular disease, respiratory illness, diabetes, and pregnancy complications. Research also confirms that regular visits to the dentist may help in the early detection of serious physical illnesses, such as diabetes.
Because people with dental insurance visit their dentists more often, they are more likely to avoid serious oral health problems that are expensive and time-consuming to treat. Dentists have always recommended preventive care, and dental insurance is set up to emphasize prevention and early detection. At a time when increases in medical premiums are squeezing other benefits, this cost control.
Cost-effective for you
Dental benefits reduce the possibility of dental emergencies, keeping people on the job rather than in the dentist’s chair.
Every $1 spent on prevention in oral health care saves $8 to $50 on restorative and emergency procedures.
Working Americans lose an estimated 164 million hours annually to dental disease or dental visits. Children lose an additional 51 million hours of school to dental-related illness, causing more lost work time as parents tend to their children’s needs.
To learn more about dental plans, please click here.
If you have any questions click here to email us or call Pedersen Associates today at 414.573.8555.