Week 30: Reduce Expenses, Tactic 8

What can you do this week?

• Look at what life insurance you currently have and what you pay.

• What are your needs? Temporary, permanent, or both.

• If the amount is enough (check here), is there a lower cost way to meet that need with term insurance only and what trade offs are involved?

Who Needs Life Insurance?

• Simply life insurance is for people who love other people.

• If you pass away unexpectedly or before your plan is complete, life insurance can provide security for survivors.

• The death benefit can payoff a home, replace a paycheck, fund an education, ensure a surviving spouse can retire, etc.

  

  Needs Drive Coverage Type

• Temporary needs don’t last your entire life but a season, maybe 10-30 years.

• Getting your kids educated and out of the house is one example. Another is paying off your primary residence mortgage.

• Permanent needs are lifelong.

• These might be the fair distribution of your estate that has a large, illiquid asset you have to divide among many family members that you can’t sell while you are alive.

  

To learn more about my services, checkout my website and schedule a call.

Term products cover temporary needs. Permanent products can cover permanent needs.

• Ideally term products protect you in a season of life where you have lower income, more debt, and less assets.

• After working for years, you become financially independent so your investments will carry you to your plan’s completion (parachute).

• If your plan requires a lot of cash assets at your passing and much of your wealth is tied up in a business or land for example, permanent coverage maybe needed for your plan’s completion (bridge).

Term Is Significantly Less Expensive

• Most people are served well with term insurance.

• Unless your specific situation calls for a permanent solution because of a permanent need you have, you should not pay more.

• The cost difference can be between 5-15x higher to own permanent insurance. That’s a lot of opportunity cost if you truly don’t have the need that requires this product.

• If this is you, you can save a good deal of money by replacing your permanent policy with a term one instead.

What Savings Are Possible?

• If you already have a permanent policy you don’t need, term insurance may still be affordable and save you money.

• In one analysis here, the difference in premium can be substantial, even if you’re 20 years older when you make the switch.

• The key of course is making sure you only have the temporary needs best met by term insurance here.

“I Already Have It At Work”

• Your employer will usually give you 1 or more times your annual salary in coverage. If you earn $50,000, you get a renewable group term policy paid for by the company of $50,000 if you die while employed there commonly.

• A valuable benefit but it may not be enough for your situation.

• A needs analysis is how you can determine if you have enough.

• Group term insurance offered by your company has pros and cons to consider. If all of your coverage is through work, carefully consider these.

Work Is Not The Only Group

• If you’re concerned about your employer viability or are thinking of going on your own at some point, know there are other group term insurance providers.

• Professional associations can be a great source of group term coverage. If you still remain a member of an association, it can provide security that group coverage remains outside of your employer.

• Individual coverage is a far better still means of providing this security however.

If you’re not a subscriber already, hit that button below to receive new tactics each week to help you grow income, reduce expenses, and save more now!

If you know others who would benefit from this content, please share the newsletter URL link on your social channels!!