Life Insurance and Risk Planning & Financial and Investment Planning

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Life evolves and so do your insurance needs. Life insurance is an important way to transfer risk from your own assets to an insurance company. Financial and Investment Planning utilizes life insurance as way to minimize costs and effectively transfer risk. Risk planning is a cornerstone of proper financial planning. If your investment advisor does not ask you questions about risk and financial pitfalls, they should. 

Term Life is an inexpensive way to cover the risk of losing the income from a loved one from an an accident or natural causes. It is the most efficient and cost effective way to provide a large death benefit to cover your loved ones. Term Life typically comes in lengths from 10 to 30 years. Age, health and gender play a role in how much premiums are. 

Everyone's situation is different. If you are young, married and have small children, your need may be significant. If you are single and plan on remaining that way, your life insurance needs may be significantly less. A good rule of thumb for the typical growing family is the following:

Ages 20s and 30s with young children: 20-30 times annual household expenses

40s with young children: 20-25 times annual household expenses

50s with children out of the home: 10-15 times annual household expenses

50s and 60s: Life insurance risk planning for long term care planning-more on this below

Did you know that life insurance is not just for a death benefit? Many life insurance policies now have living benefits. Living benefits are a way to tap into the death benefit of your life insurance policy for many of the following reasons: heart attack, stroke, cancer, disability, blindness, long term care, major burns, terminal illnesses and many more. Our investment advisors can help you find the right policy for your needs.

Let's say a 30 year old purchases a term life policy with living benefits with $1,000,000 death benefit. At the age of 45, they become ill with stage 3 cancer. During that time, they may be unable to work, earn wages and have significant medical bills. A policy like this could accelerate (or pay in advance) a benefit to the insured for $500,000.  The remaining death benefit of $500,000 would remain in tact. The policy acceleration could be used for whatever the policy holder wants. This is a way to use life insurance to protect against illness and accidents that do not result in death, but have an impact on a person's financial well-being. 

Long term care insurance used to be common place and  could easily be purchased. Today, that is not the case. There are only a few insurance carriers left that even offer the product. Now, instead of buying long term care insurance, many will look at life insurance with long term care benefits for proper risk planning. This is tremendous advantage because typically with long term care insurance, if you do not use it, you lose it. You pay a premium but never get any benefit from the policy if you pass away without needing long term care. Life insurance is different. Its a way to cover your life as well as long term care needs in one policy. Either a long term care situation will occur or you will pass away. Either of these situations would pay a benefit. The long term care aspect typically has what is know as a "trigger" event. This trigger typically is described as losing the ability to perform 2 of the 6 of the normal activities of daily living. Which include:

1. Bathing and showering
2. Dressing
3. Eating
4. Maintaining continence or toileting
5. Transferring from a wheel chair to a chair or seat on ones own ability
6. Grooming

If you are unable to perform 2 of the 6 above activities, that would a trigger for the policy which would allow one to collect benefits from their life insurance policy. Another trigger could be dementia or cognitive dysfunction, such as Alzheimer's disease. The benefits can be paid out in a lump sum or paid in a series of payments. There are many different policies and one of our advisors can provide quotes to review the coverages, benefits and limitations of the policy.