Life Insurance Strategies
- Protecting your family is important
- Insurance companies should compete for your business
- In finding the most cost-efficient insurance for your needs
- You family counts on you
- Not all insurance carriers are equal
- Cost matters
Many people find life insurance to be confusing or may struggle to identify why they even need life insurance. In the most basic description, life insurance pays a cash death benefit to your beneficiaries when you die. Why are there so many types of life insurance you may ask? The answer: Because there are so many things people want to protect in the event they die prematurely or even if they live a long life.
- Protection against income loss: This is the starting point for many. If you pass away, will your family have enough money to live the same standard of living that they enjoy while you are alive? A common number to help the survivors may be 10 to 15 times the insured’s annual gross income. That may sound like a lot of income, but if you are the only breadwinner that may not even be enough.
- Pension planning/defined benefit plan: Through appropriate planning, you may be able to draw substantially more income from your lifetime pension. This strategy is often referred to as pension maximization.
- If you are lucky enough to be a part of defined benefit plan, commonly called a pension, you’re probably like most people — you find the information is complex. Your pension plan may not provide a great education on your options and you basically feel in the dark. Worse, you may not even be aware that there are choices you have to make that can have a tremendous impact on your income for you and your spouse. You need to get educated on your pension choices in retirement. As an example, did you know that ERISA law indicates that if you’re married, you can’t take the highest income stream in retirement without approval from your spouse? In addition, you may forfeit up to 20% of your pension to your plan and not even understand that it is happening?
By making pension decisions without knowing the consequences, you can receive substantially less income from your pension in retirement and limit the amount that goes to your estate. Get the facts and make informed decisions based on solid planning and understanding.
- Estate planning: Leaving a legacy to your family or a charity is the goal of many. Life insurance may be the most efficient tool for the transfer of intergenerational wealth. If designed appropriate as part of a broader estate-planning strategy, it could limit the taxes your family pays upon the transfer of assets to the next generation.