Life Insurance Options
OK. With all this folk on the C-19 virus, and DEATH count, I have had a couple questions from folks about LIFE INSURANCE.
First. I use to have my life insurance and variable annuity license. They have expired. I am not trying to sell you anything. Just educate you on Life Insurance. So a few thoughts.
- Life Insurance is generally used to replace income for the bread winner. So. If you are single, you really do not need life insurance.
- Children do not need life insurance.
- If your married. Generally insure the bread winner. Now if both of you are equal contributors, to the household. You both my need life insurance to replace income. But if one dies, the real question is can the other survive with the income. Keep in mind generally, men die first, and women live longer.
- How much life insurance. Kind of as a rule of thumb, you need to look at ROI on investment. How much money, at what ROI would replace income. Example. I think I can get 10 percent a year on investing (actually much more, but an example). If I have a 1 million dollar policy, that means, 100k to the family. Other folks say 8.5 times the income you need. Need 50k of income each year? That means. 425k of life insurance. 50 times 8.5.
- A rated life insurance companies or above are best. Just to ensure they will be around, when it is time to pay off.
- Term Insurance. Is PURE life insurance. No cash value, no mixed investment. It often is the cheaper insurance policy. One of my mentors Charles J Givens, use to say, buy Term, and invest the rest. Do not mix life insurance with investments.
- Buying a level 10 year term rate, may ensure you rates do not go up for 10 years. Pay the same each year for insurance. Normally insurance goes up each year, as you get older. If your need is 5 years or less. You might consider ART (annual renewable term)
- Whole life and Universal life Insurance. Is a mixture of life insurance with investment. Often the investment, is not substantial easy year, and the life insurance is expense (compared to just term). Some folks say whole if named, cause your money goes into a HOLE, and you never see it. BUY Term insurance.
- Now there are other types of life insurance, sold for specific reasons. For example. Variable Universal Life insurance, or Single Premium Life insurance as a Tax Shelter. And many others based on business needs or poor health needs. Talk to an Insurance expert about your specific needs. But generally for the average person Term Insurance and Invest the rest.
Some thoughts for you. Realize too. With the C-19 virus killing folks. It is likely that NEW insurance clients, will likely have a higher premium and even more important for the company to have an A rating or higher.