September is Life Insurance Awareness Month, and it is a great time to get out the policies, dust them off, and review them. Our need for life insurance can change quite quickly, but we often forget to reassess how those changes have affected our life insurance needs. The TrustBank Wealth Management team asks customers frequently about their current life insurance policies. In most cases, we just want to make sure the coverage is in place to carry out the financial plan that has also been put in place. We want to insure that debt has a means of coverage, that children will be able to continue their everyday activities, and that spouses will be able to support their family. Another important piece of the plan that is sometimes forgotten is your plans for an endowment to a special organization or church. All of these goals can make people feel overwhelmed. That is where we have found people appreciating the value in the team approach we offer to our customers.
Our team truly understands your financial plan is as unique as you are. We understand your goals are personal and important to you. We recognize how life insurance can play an important role in these plans and goals. We often get asked what the difference between term and permanent life insurance is. Even more, we get asked, “what policy should I buy?”. The difference between term and permanent life insurance is something we can tackle in a newsletter, but what is right for you is something we really need to sit down to discuss. Our team members are here to review your current policy, address any questions you may have, and make suggestions for changes to your current plan which will assist you in making sure all of your life insurance needs are covered.
Term vs. permanent
So, just what is term insurance? I often like to say it is like a temporary policy to cover a temporary need. I like to think of a mortgage as a temporary need. If you have a $250,000 30-year mortgage, then a $250,000 30-year term life insurance policy might be appropriate. Sometimes it is a good idea to “stack” life insurance so you can effectively address each individual need. Another example of a temporary need is the care of young children. Many scenarios suggest your income continues for the number of years your children will still require your financial assistance. If your youngest child is currently 2 and you feel they will graduate from college at 22, you might say you need 20 years of coverage to protect this need. If your current income is $50,000 per year, a $1,000,000 20-year term policy would protect this need.
Do I need permanent coverage? Unfortunately, all lives will end at some point. That is not something we can control. However, we never know when that might happen. Premature death is always a hard thing, but death at any time is a little easier on the family with the right life insurance plan in place. I always tell my customers that a small, permanent policy is usually a good idea. This way we are always certain that final expenses will be covered, and the family will not have to use other assets to take care of these expenses during a difficult time. Most life insurance companies will even allow a funeral home assignment which means the death benefit can be paid directly to the funeral home making one less thing for the family to worry about during their time of grieving. There are other scenarios when permanent insurance is necessary and a good idea. You may have heard the terms “whole life” and “universal life” thrown around when talking about permanent insurance. In some financial plans, we find these types of coverage appropriate. But, as stated earlier, your need for life insurance is as unique as you!
Some individuals do not like discussing the topic of life insurance. However, I like to refer to it as “love insurance”. This insurance is really put in place for those you love. You are really ensuring their lives will continue without worry. You are allowing your legacy to live on. Our team is ready to help you assess your financial need for life insurance.