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Life / Disability

What is life insurance?
Simply put, it's money that an insurance company pays to anyone you designate, if you die. A life insurance policy can be a very inexpensive way to replace your income in the event of your death - it is not an investment and should not be used to fund retirement or save for your children's future college expenses. There are much better investment options for those needs.

Do you need life insurance?
That depends on your answers to two more questions.

  1. "In the event of my death, will anyone experience an economic loss or hardship?" If the answer to that question is "yes," then you're ready for the second question:
  2. "Do I care?" If you do, then you've determined that you need life insurance.

How much life insurance do you need?
Once you've decided that you need life insurance, you'll want to determine how much insurance you need. That, of course, is a very personal decision. A general rule of thumb is that you should have at least six times your annual income in life insurance. But in determining what is best for you, you'll also want to consider other obligations you may have and whether or not you want to have them completely or partially paid for upon your death. Such expenses include your mortgage, outstanding debts and future college expenses for your children. Current tuition costs for a 4 year public university are running about $7,000 per year while 4 year private institutions are running around $16,500 per year. When estimating future college expenses be sure to factor in annual inflation.

What type of life insurance is best for you?
There are two basic types of life insurance: term and permanent. Term insurance is purely life insurance while permanent (aka "cash value" or "whole life") policies include a savings element.

You've probably heard lots of sales pitches and marketing hype regarding cash value polices. But, for the financially savvy, term is often a better choice - and here's why:

  • It's straightforward. If you die during the term of your policy your beneficiaries get paid - that's all there is to it.
  • It's inexpensive. You aren't paying anything extra to fund a savings account or cover investment fees. And because the market is so competitive for term insurance, companies have a huge incentive to keep prices low.
  • It's easy to shop for. With relatively little effort you can comparison shop and assure yourself of a good deal.
  • Term doesn't double as an investment. There are better ways to save and invest.
  • You pay only for what you need when you need it. You typically need life insurance coverage for a specific period of time (until the kids are out of college, for instance).

Disability Income Insurance

Disability income insurance pays you a monthly benefit to replace a percentage of your income if you're disabled and therefore unable to work.

What it does:

  • It protects your most valuable single asset: your ability to earn an income.
  • It lets you tailor the cost and terms of the policy to fit your own budget and needs, by allowing you to choose how long you'll wait after becoming disabled for benefit payments to begin, and how long the payments will last.

What it doesn't do:

  • It doesn't replace your entire paycheck. Most policies will only cover up to 60% or 70% of your salary.
  • It doesn't pay benefits under any and all circumstances. Policies include a specific definition of "disabled" which you must meet in order to qualify for benefit payments.

How do you get the best policy at the best rate?

Request a quote or contact us.

 

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