The delivery of TAX-FREE LIFE INSURANCE proceeds is one of the most powerful social and economic forces in our country. What a shame that so many people don’t understand or appreciate its value.
As you carefully read this post, you’ll be better able to make wise and forward-thinking decisions regarding your LIFE INSURANCE.
By far and without exception, a life insurance claim is the most sobering and rewarding aspect of my profession as an insurance agent.
Sobering in that it reminds me of the brevity of this life and the certainty that it will end for all of us… eventually.
Rewarding because it’s an opportunity for me to deliver: A stay-at-home mother to children and the promise of a quality education for them, a paid-for house and a debt-free existence to the family, or a comfortable retirement for a weary widow.
It’s ONLY with the incredible power of LIFE INSURANCE that these are possible. When it comes time for you to consider this valuable cornerstone to your financial plan, you’ll want to make some very informed and calculated decisions.
Let me walk you thru some of them to help you make the ones that are best for you.
If you’ve read any of our other reports, you’ll know that even though insurance has been part of our culture for over 100 years, to most people – It’s still a just a mystery. And because they don’t understand it, a lot of people think they’re being “ripped off” by the Insurance Industry; aka “The Club”
I want to end that for you.
I'm an industry "insider": A licensed member of “The Club”
I’ve been inside the insurance business for over 25 years and I know it like the back of my hand: From policy to claims and back again.
I've sold insurance. I've bought Insurance.
I've studied it and I've learned that there's "good insurance" -- and there's "not-so-good insurance".
All insurance is "created equal".
Let’s take a quick trip with your imagination.
Picture yourself gone. Yes, I mean GONE, gone! Kind of morbid, I know. So if it makes it easier, go ahead and picture your exit as some grand, heroic or adventurous one. Maybe you went out skydiving or chasing wild horses in Wyoming. Or possibly you saved some kids from drowning when a school bus plunged into the lake. Either way… you’re gone.
Now -- Just ask yourself a few of simple questions.
- Are there some bills left to pay? Funeral? Credit cards? Maybe a car? Or possibly a gambling tab out at Viejas Casino?
- Is someone going to suffer without your income?
- Is there anything to which you’d like to leave a legacy? Possibly you’d like to start a scholarship fund for some special group or just kids who need it. Maybe you’d like to have a small part of funding Meals-on-Wheels or grant some wishes come true through Make A Wish Foundation. Or maybe you’d like to leave something for your church. The possibilities are really endless.
If you answered yes or will be answering yes to any of those in your future, then LIFE INSURANCE is something you should seriously consider.
LIFE INSURANCE IS USUALLY THE LEAST EXPENSIVE WAY TO PAY FOR ANY OF THE ABOVE ITEMS.
“How is that possible?” you ask.
Life insurance dollars come to your beneficiaries costing just pennies on the dollar. Here's how it works... Dollars you earn and have put into savings, on the other hand, cost MORE THAN A DOLLAR for every dollar you receive. You work; you get taxes taken out of your pay. Every dollar you spend really costs you about $1.27 to get after you’ve paid the tax man. Life insurance, on the other hand, is ALWAYS delivered for just a fraction of a dollar! You may pay $500 per year for $100,000 of insurance. You may have it for 25 years before you die. $500 x 25 years is only $12,500, yet the policy will pay $100.000. You've paid only 12.5 cents for every dollar of benefit.
I think I know what you’re thinking about this point.
You’re thinking of all the hassle it is to decide what kind and how much and then complete the application and then to get the physical (often you DON’T need one) and then on and on and on…
I know how you can quickly get past all that…
In reality, it only takes about an hour. You can just skim this report to get an overview of what you need to be thinking about and then if you’d like…JUST CALL ME.
I’ll likely take about 10 minutes of your time on the phone to see where you’re at and then, if you’re ready, we’ll set a time to get together. If you just want the information for future reference, that's fine too. It’s really pretty simple and I’LL DO MOST OF THE WORK FOR YOU.
After all… It’s what I do.
So let’s just hop right into it….
Life Insurance Need-to-Know #1
Don’t buy it unless you need it
The truth is that nearly everybody could probably use a little Life Insurance. Remember the questions we asked above? If you answered yes to any of those or you’d just like to make your exit a little easier on those who are left to sort out the pieces and arrange your funeral and wake, you’re probably a good candidate for at least a little policy.
If you buy the right kind of policy, you’ll build up cash values within the policy and in many cases you’ll build more than the premiums you’ve paid. So if you’re thinking you might need some life insurance, go ahead and get a small policy that builds cash for you and you’ll be on your way.
Sometimes, people just don’t need or want any life insurance. You might be single with no debt and sufficient money in the bank to take care of ALL of your final expenses such as funeral cost, paying off all your debt, enough money to pay for the disposal of all your personal property, etc, etc. If you are, and you just don’t want any life insurance and think that you’ll never need it, then don’t buy it.
But....
If you think you might need it in the future you might want to get a small, cash value policy with a GUARANTEED INSURABILITY OPTION. (means you can buy more later, but you don't have to...)
Life Insurance Need-to-Know #2
If you’re going to buy it, buy the right amount
We could make this portion of this report very lengthy, but I’ll give you a couple of simple options.
First is just the REPLACE MY INCOME estimate. Use the one-step chart below and there’s your answer.
Table 1-Income Replacement
It’s just as easy to buy too much life insurance as it is to buy too little. You want to be sure you have the right amount of coverage.
You should also consider life insurance on your spouse or any other person on whose income you depend to make ends meet each month.
If you’re married with children you should also consider if there additional expenses should you and your spouse die at the same time or within a short time of each other. For example, you might want to provide additional monthly income to whomever you have designated to finish raising your children for you.
1. Would you like to pay off your mortgage or have money available to pay the rent? If so, either enter the mortgage amount or your Annual Rent Cost times the Number of Years)You’d like to Provide. (Rent x Years = TOTAL)
$ __________________________
2. How much do you want available to pay off any other debts like credit card balances, car loans, student loans, personal loans, etc.?
$ __________________________
3. How much of your annual income will your family need each year after your death? (Remember if you paid off the house above or
provided rent money, you won’t need to include that in their annual needs.) Use the INCOME REPLACEMENT TABLE above.
$ __________________________
4. How much do you want to set aside to pay your funeral costs? You may also want to complete this calculator for your spouse to see if they have a need for life insurance.
$ __________________________
5. How much do you want to set aside for any other needs such as an emergency fund, gifts to charity, or a family member with special needs?
$ __________________________
6. How much do you want to provide for your children's education if you die?
$ __________________________
7. TOTAL NEEDS: (add 1-6 above) $ ____________________
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A. How much life insurance (individual and group) do you have now?
$ __________________________
B. What other assets (such as savings accounts, CDs, mutual funds,
stocks, bonds, 401k, retirement plans, or pension plans) would you
want your family to use to meet these needs?
$ __________________________
C. TOTAL RESOURCES: (add A & B above)
$ __________________________
TOTAL Need for LIFE INSURANCE: (Subtract Line C from Line 7)
$ __________________________
You may also want to complete this calculator for your spouse to see if they have a need for life insurance.
Can I give you a little hint?
If you’re married, let your spouse decide how much life insurance to get on YOUR life -- And vice-versa. Whoever will be around to fix the problems should get to decide how much $ will
be available.
As you fill in the amounts, keep in mind the people that will be dealing with these issues. Do what’s best for them and you’ll be on the right track.
Life Insurance Need-to-Know #3
If you need it, then buy it, AND BUY THE RIGHT KIND
Face it! Odds are you’re going to live a long, happy and healthy life and your family WON’T need this policy. So buy the kind of life insurance where you get some or all of your money BACK when you’re older.
“Cash Value” or “Permanent” life insurance policies are tremendously powerful financial instruments. BUT…they’re designed for insurance that you’ll need to keep for all of your life.
You’ll probably want a little permanent life insurance in your plan because you will SURELY make a claim on it someday. Hopefully it will be when you’re VERY old & wrinkled and your need for life insurance is at a minimum: Just enough to pay off a few bills and cover your funeral expenses.
- Do I want some life insurance in force when I die? (probably yes)
- What’s my best guess of when that will be? (let’s say you guess 78)
- How much do I want in place at that time?
Whatever your answer is for question 3, THAT’S how much permanent insurance you should have. Consider term insurance to fill the rest of your needs.If you’re currently one of the bread-winners in your household and there are people depending on your income for everything from food to tuition, then you probably need a pretty big chunk of life insurance – For NOW at least. You likely won’t need that much for the long term. THAT’S where TERM insurance is likely your best bet.
Get some permanent insurance for the long haul; maybe $25,000 - $100,000. Usually you won’t need more than that. Get TERM INSURANCE for the temporary times in your life that you need more. Then DROP IT! No loss.
And here’s the real rub! TERM insurance is usually only renewable to a certain age and even then it gets VERY expensive. When you’re 70 or so (and your income is less because you’ve retired) your term insurance could be too expensive to keep and you may still want or need some life insurance. With permanent insurance, there’s usually enough cash value there so that you can just QUIT PAYING and be insured for life.
Life Insurance Need-to-Know #4
Once you buy it – KEEP IT until your reason for buying it no longer exists
Too many times I’ve seen people buy life insurance: Either term or permanent and then, for some reason, let it drop. Usually it’s for one of a couple of reasons.
They initially got in a little over their heads with too big of a monthly premium and it’s finally caught up to them.
They didn’t buy for the right reasons.
Make a commitment when you get your life insurance to make it comfortable on your budget so you can keep it with no financial pressure. And commit to keep it until the reasons for purchase no longer exist.
For example, if one of your reasons is to ensure that your kids complete college, and then keep it until they’ve all walked across that stage and received their diploma. (Or at least until you’ve made that last tuition payment.)
If you don’t buy this way, you’ll just be wasting your money if you keep the policy for several months and then quit.
Here in the Dennis Volz Agency, we want you to be comfortable with your insurance.
We’ll explain your LIFE INSURANCE options in simple, everyday language that you can understand.
We strive to personalize every insurance policy to be sure you have exactly what you need and want.
NOTHING MORE; NOTHING LESS
Life Insurance Need-to-Know #5
Let Uncle Sam help you pay your premiums
When you purchase permanent life insurance, the money accumulates tax-deferred. You end up saving even more because the accumulation is tax favored. This could make you think that even the Federal Government thinks that life insurance is a good idea!
Life Insurance Need-to-Know #6
Don’t touch the Nest Egg
Money that you contribute to you permanent life insurance can build a significant amount of cash over time. This money is available to you. Let me encourage you that as those numbers start to grow, LEAVE IT ALONE!
Here’s a good rule of thumb to govern your dipping into the nest egg.
No, a year-end sale on a Corvette doesn’t count as a PHENOMENAL OPPORTUNITY! Nice try !
Life Insurance Need-to-Know #7
Review, review, review… But only once a year or so
Every year that you’re living with either too much insurance, the wrong kind of insurance or not enough, you’re probably wasting some money.
A simple review that can take as little as 10-15 minutes over the phone with your agent can prevent this. Sometimes changes in your life can be so much and so harried that you don’t even realize when things affect your needs for life insurance. An agent who’s willing to spend the time required with you and asking the right questions can uncover these changes and often save you hundreds of dollars in the process.
A FEW RANDOM QUESTIONS...
What about my GROUP insurance at work?
Group insurance is probably the LEAST EXPENSIVE of all life insurance policies. Sometimes it’s even FREE! (Well, paid for by your employer anyway) My advice is TAKE IT! But don’t depend on it. Count it as just a little extra, but in addition,
Have your own plan that YOU CONTROL.
Group insurance can come and go. The company can “change the deal.” You could change jobs and be with out coverage for a time. Maybe the new job doesn’t offer group life insurance.
I’ve seen people become uninsurable for health reasons, change jobs and then they’re unable to replace their group insurance. Keep your life insurance under your control not your employer’s or other circumstances beyond your control.
Can Life Insurance double as my RETIREMENT?
Permanent insurance should NEVER be a substitute for a good retirement plan. Any agent that tells you to dump hundreds of dollars a month into a permanent life insurance plan to fund your retirement before you’ve established a good, regular investment program outside of life insurance for your retirement should be questioned.
The permanent portion of your life insurance does give you flexibility in your retirement years. You can keep the insurance, sometimes stop paying the premiums (and continue to be insured), draw on some of the cash value if you need to and a host of other options. But life insurance should never be your main vehicle to retirement planning.
A word about beneficiaries…
The beneficiary is the person who receives the proceeds of a life insurance policy at the death of the insured. Carefully structure and word your beneficiary clause. You can cause big problems if you’re thinking one thing and actually say something else in the beneficiary section of the policy.
Carefully discuss this with your agent. Something as simple as a Per Stirpes clause can save a lot of confusion.
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So how do I know just how much I can afford to spend on my life insurance?
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What about Life Insurance on my kids?
Getting a small policy on kids is usually a great idea. While kids generally don’t need insurance for financial reasons it does a couple of things for them.
First it protects their insurability. Kids can sometimes develop physical problems that make them uninsurable. Doesn’t happen very often, but it’s probably a good idea to get them a nominal permanent policy.
Second, it locks in a nice low monthly premium for them. Life insurance rates on kids are phenomenal. The monthly premium on just a small $25,000 policy on a 30 year old is nearly DOUBLE what it is on a 2 year old. And that premium is good for life!
You’ll always want to get what’s called the GUARANTEED INSURABILITY OPTION. (Look back to the yellow insert )
Why should I buy Life Insurance when I'm young?
- Life insurance is cheaper when you’re younger. On the permanent portion of your insurance plan, the longer you put your money to work for you, the better the result!
- When you’re young, you’re insurable. When you’re older; maybe you’re not. We’re all just one doctor visit away from NOT being able to buy life insurance. If you’re diagnosed with even a minor ailment the cost of your life insurance can go up dramatically and in some cases, you won’t be able to buy it at all.
Other questions I could answer (but I won't here...)
Is it ultimately cheaper to pay annually or monthly?
How can I be sure that my life insurance company is safe?
What are ‘Banded Premiums” and how can they save me money?
What about Accidental Death and Dismemberment Riders? Should I have one?
Should I own my own policy or should my spouse?
Can I buy insurance on my business partner?
Is the Non-Tobacco rate really THAT MUCH BETTER?
What’s the difference between dividends and cash value?
What’s a “contestable clause” and how could it hurt me if I don’t understand it?
What are PAID UP ADDITIONS and how can they increase my insurance coverage?
Really.. I could really fill a book.
That’s why you really need a committed agent to do all this thinking with you.
After all… You probably have better things to do.
If you're in or near San Diego County, I'd be happy to help. If you're not, find a good, knowledgeable agent in your area. Take your time... it's an important decision.
When it comes to buying life insurance, you should always deal with a LARGE, WELL-KNOWN, REPUTABLE INSURANCE COMPANY. One easy rule is that if you haven’t heard of them, be suspect. I guarantee you’ve heard of ours – we’ve been at it for over 75 years! Today we have over 7 million life and annuity policies in force. Since 1929 we have been protecting American families one policy at a time. Just go to www.DennisVolz.com . (don't worry, this window will stay right here...)
WOW! Kind of impressive!
I think so.
And it’s ALL included at no additional premium...
We offer NATIONWIDE AND 24 HOUR CUSTOMER SERVICE. That’s right -- Doesn’t matter if it’s a claim or a question. You simply call my office number, 619-670-1000 and you’ll have access to our 24 Hour Customer Response Team and/or to my personal cell phone.
Should you need insurance help while away from home, we have over 1000 claim offices and over 16,000 agent offices across the United States and Canada all committed to giving you friendly, efficient home-town service (even if you’re from California ! )
We also offer free 24 hour online access to your policy information. Our company website offers you more insurance information than your brain can possibly hold. It’s all available with just the click of your mouse, 24/7/365.
We’re a friendly, local office with a licensed, trained team to assist you in every phase of your insurance. We’ve been in business here in San Diego County for over 25 years.
And, BONUS!
Whenever you call us during regular business hours, there’s NO ELECTRONIC TELEPHONE MENU to navigate -- Just a friendly voice on the phone ready to help you. (if you call after hours, there is a single-choice menu where you simply choose to leave a voicemail or to speak to a real, LIVE person)
Go ahead try it right now. If it’s during business hours, you’ll get us; after hours and you’ll get the Customer Response Center. 619-670-1000 !
“WOW”, you say!
“And that’s all included at no additional premium?”
This is so simple and easy to do.
We do all the work for you and in usually less than 30 minutes, you’ll have protected your family, their future financial stability, and your peace of mind!
Why somebody wouldn’t have their LIFE INSURANCE with us is simply beyond me.
In our agency we offer you 5 different ways to pay your premiums.
You have your choice of annual, semi-annual, Quarterly, Monthly and SPECIAL MONTHLY…
“So what’s so special about SPECIAL MONTHLY,” you might ask.
It’s special cuz it’s just so insanely easy.
We set it up for you and your monthly payment comes right out of your checking account: Same day; Every month.
Once again, If you're in or near San Diego County, I'd be happy to help.
You’ve got everything to gain and NOTHING to lose.
I look forward to talking with you soon!
Dennis Volz Insurance Agency
10783 Jamacha Bl, Suite 1, Spring Valley, CA 91978
OFFICE: (619) 670-1000 - FAX: (619) 670-1121
eMail:Dennis@DennisVolzInsurance.com
Websites: Company Site: DennisVolzInsurance.com
Client Convenience Site: 6701000.com
My 'Other Blogs'
Working by Referral
Musings from California
This post contains only a general description of coverages and is not your insurance contract. Details of coverage or limits can vary. All coverages are determined by the terms, provisions, exclusions and conditions of your policy along with any endorsements.
ALL RIGHTS RESERVED. Copyright (c) 2006 – SmarterInsurance Inc -- No part of this document may be reproduced in any form, or by any means, without prior written permission of the copyright owner. LEGAL NOTICES: While attempts have been made to verify the information provided, SmarterInsurance Inc will not assume any responsibility for errors, inaccuracies, or omissions. Since this document presents general discussions, always consult a qualified professional regarding your specific tax, legal, financial, and personal circumstances. (911.21740)
