By Dan Schulte, Senior Vice President and Manager, Annuities and Insurance
Is your family dependent on your ability to make an income now and in the future? If the income you earn would suddenly stop, due to death or disability, could your family continue to meet their financial obligations, such as paying the rent or mortgage, paying bills, daily living expenses, or even sending a child to college?
While the planning discussion surrounding death or disability is often uncomfortable, it is necessary to ensure you have the proper amount of life insurance and disability insurance for your family to maintain their current and future standard of living, should you get sick, injured or die. A disability insurance policy can provide a monthly income to you if you are unable to work due to illness or injury. If the policy is purchased with after-tax dollars, the benefit will be paid income tax-free. A life insurance policy will provide a lump sum death benefit to your family in case you die early or unexpectedly. Upon death, beneficiaries pay no income taxes on life insurance proceeds, so the effect on your family’s long-term financial security can be even more impactful.
How much insurance do I need? Everyone’s insurance needs are different, and throughout an individual’s lifespan, those needs can change. As a result, changes may need to be made to the amount and possibly the type of insurance owned. As a first step in reviewing insurance needs, gather your most recent annual statements of existing life insurance and disability insurance products. Typically, these statements will give information on the existing contract premiums, cash value and benefits of the contracts. If needed, you can find the actual policy or contact the insurance company for contract details.
Your financial advisor can help you take an inventory and review of these contracts and determine if you have a surplus or shortage of coverage by conducting Life Insurance Needs and Disability Needs Analyses. These analyses can compare income needs to income sources and can determine how much additional insurance is needed, to protect against any shortfall.
Once a need is determined you will need to undergo medical and financial underwriting with the insurance carrier. When this process is completed, the insurance carrier will let you know if you are able to purchase coverage and at what price. Your financial advisor can assist you with the application and underwriting process.
Your ability to make income is the engine that powers your family’s financial goals. If that income source stops due to death or disability, so do the goals. Let your financial advisor review your current insurance situation to ensure your family will be protected should your income be halted due to an unforeseen catastrophic death, sickness or injury.
IMPORTANT DISCLOSURES: The information provided is based on internal and external sources that are considered reliable; however, the accuracy of this information is not guaranteed. This piece is intended to provide accurate information regarding the subject matter discussed. It is made available with the understanding that Benjamin F. Edwards & Co. is not engaged in rendering legal, accounting or tax