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8 Key Questions - Ready to sit down and discuss life insurance with your financial representative? Here are some questions to ask.
Ask Yourself
What are some of the unique needs and expenses I need insurance to cover? List all of the things you and your spouse contribute to your lifestyle. Beyond income, insurance and savings, think about all of the duties you both cover in your day-to-day life, like lawncare or cleaning the house. If your spouse dies prematurely, what would it take to cover all of these needs?
What are my goals and how will I finance them? Before you can figure out what role insurance can play in your overall financial strategy, you need to look at the big picture.
How would I like to divide my assets among family members? It’s good to have a sense of how you would like to handle your estate. If one child will inherit your business, for example, insurance policies benefiting your other children can be the most effective way to treat them equitably.
Ask the Professionals
What role can life insurance play in my long-term financial strategy? “Life insurance adds stability to your financial future,” says Todd Yeiter. “Regardless of the stock market or anything else, it provides a known amount of money at an unknown time in the future.”
What’s more important, the amount or type of insurance? First determine the amount of coverage required to meet your goals, especially when they involve protecting your family’s lifestyle. Look for gaps in your employer-provided life insurance; individual coverage may be able to step in and fill them. Only after goals are established should you decide on the type of policy (term versus permanent, whole versus universal, etc.) best suited to your situation and finances.
Will I have any flexibility with this policy? Policy types vary. Some allow you to increase, decrease or skip premium payments. On others, you can adjust the death benefit or build and access cash value. Adding riders can increase your options. A financial representative will outline solutions to fit your needs and make sure your life insurance coverage keeps up with inflation costs.
How can I ensure a secure future for my spouse? Have a clear picture of how the death of a spouse will impact the survivor’s income. Life insurance has an income tax free death benefit so it can be used as a supplement to provide income for the survivor. As Kevin Ruebesam notes, “I don’t just love my wife for as long as I live, I love her for as long as she lives.”
Because of its multiplier effect and the fact that its death benefits are income tax free, “there is no better wealth transfer vehicle out there than life insurance,” says Marlin Pruismann.
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