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The Insurance Continuum
There is a menu of what is right for you based on your age, health and financial funds availability. Unlike in banking or with financial brokers, Insurance is regulated so we cannot and will not place you in product that is not suitable for you. Insurance is and will remain much more transparent than financial instruments. The issue is that people hate to learn. I will try to make it more simple here.
As you move to the right you are higher on the level of needs met. At the far left you are just covering the basic needs such as just your funeral. Just to the right of that you can cover a few things surrounding all of your end of life needs beyond just the burial. As you move to the right you are protecting assets such as your home and life expenses such as college funds, and at the far right you are ready to plan for a beautiful retirement in a stress-free way.
Pre-Need/Funeral Expense: This is sold directly to funeral homes and it’s a much higher price point. A funeral home will take out a pre-need policy on your life when you set up your funeral plan with them. However rather than your family being the beneficiary, the funeral home is the beneficiary instead. Any extra money will go to the funeral home rather than to your family. However you still have rights. And you can still cancel or cash out of that plan and receive the money although it will take a professional to help you achieve that--unless the funeral home goes out of business. Make sure to keep a hold of all of your paperwork from the funeral home. Expect to pay $5,000 to $8,000 within a short time span, like a few years.
Funeral homes like to get your deposits up front because they collect your money with no contractual obligation. They say they will take care of it. And I am sure they intend to, however it’s not in the contract. If they go out of business they have no obligation to you. So it’s risky for you. Usually you overpay. People like pre-need because of the human element of going into a place physically a funeral home and buying it. I can see that. But it’s sad when that place goes out of business and I have seen that too.
Final Expense Life Insurance:
These are whole life policies with premiums that never go up and policy values that never go down, and the death benefit can go up to about $40,000. Beware of polices like these that are marketed in the mail on on TV. They may have a two year wait. Buy these from licensed agents licensed through your state department of insurance only. Ask to see their credentials.
These are popular because Final Expense Life insurance can underwrite people who are dealing with common ailments that can be hard to insure like COPD, Diabetes, Rheumatoid Arthritis, past Cancers, and other health issues that may have give you a difficult time when trying to get coverage. A good final expense agent is professional, confidential, understanding and knowledgeable about medications. Your annual budget will be about $300 to $600.
We are experts in finding and securing day one coverage for people who have complex health issues.
Whole Life Insurance
When you are younger or in great health you might qualify for a whole life policy that has a death benefit that is between $50,000 to $2,000,000. Rates can be discounted based on the size of the policy. Each policy has an internal rate of return and grows cash value. Once matured they can be cashed out or you can wait for the death benefit. Larger polices will require income verification. This annual budget is up to you based on the range.
Term Life/Mortgage Protection
These range from $50k to $5,000,000 and are used to cover large life expenses. They expire within a certain term and that trade off means that they are much less expensive versus the size of the death benefit, dollar for dollar. These are very useful for Key man insurance for a business, for protecting an asset such as a home or building, or for maintaining a future expense such as putting kids through college. This annual budget will be anywhere from $200 to $2,000
Indexed Universal Life
These policies are designed to maximize the lifetime cash value of your policy. The question to ask yourself is how much can I and do I wish to save for my retirement? In this case this strategy will also provide you with a sizable death benefit, unlike your usual investment planning concepts.
However with these policies, you build them not so much for the death benefit but for the amount of cash accumulation you can earn in them. This is today’s answer to long term care insurance. We have seen growth rates of 5.8 to 8.3% per year and there is no downside risk in them. So without being an investment wizard you are seeing great, tax free, risk free returns.
Eventually cash may be drawn out, tax free for retirement living. There is still a death benefit in the policy. Up to 2% of the death benefit value per month will be paid to the insured for any kind of care expenses with some of our policies. Your annual budget will be from $600 to $6,000 or higher depending on the features you want.
Annuities
If you are concerned that your pension may not pay out the way you want it to, for the amount of time you want it to, or if you have your investments sitting in cash, or in a house or in some risky instrument, one way to go is to become the master your own universe and place it into an annuity. These may be funded in a number of ways to design a secure your own set of guaranteed cash flows into retirement. These are securely invested, with no brokerage fees, and that also provide a nice tax-free death benefit to your beneficiaries when the time comes. Your annual budget will be from $5,000 to $12,000 or higher. Some annuities can be funded with a single event like selling a home or cashing out of a fund.
The point is you do not have to wait for a surprise from your pension plan, or from your broker. You can take steps to design the outcome you want now. We have about 70 different companies to choose from with annuities.
Live well. Love well.