What to do When Receiving Life Insurance Money

Life Insurance Money

Recently, I contributed to an article about receiving life insurance money. The Q&A is below followed by a link to Melanie’s full article on the website Meet Fabric.

So do you have an order of things/checklist that people should go through when getting a life insurance payout? 

Receiving a life insurance payout is no different than a financial plan without life insurance proceeds. People have current needs to address. These vary from paying-off debt, building an emergency fund, saving for retirement, replacing the income of the deceased, paying for the final expenses of the deceased, etc. As a financial advisor providing comprehensive planning, I look at everything for my clients. So upon receiving a life insurance payout, the families needs are addressed first. Next, a go-forward plan is built upon their current situation.

For example, the proceeds going to a family who is debt free and the surviving spouse is still able to work. The priority may be to fund a college education account and increase retirement savings. In another example, the surviving spouse is a stay-at-home parent, and carrying mortgage and credit card debt. For this family, it may be in their best interest to pay-off the debt and use the remaining funds to support day-to-day living expenses. 

Also, one of the stories included someone who received a life insurance payout and kept the money in the interest-bearing account from the company and not get a check into her account. Do experts typically advise leaving it in the interest-bearing account, or taking it out and investing it instead?

Upon the death of a loved one, we encourage the beneficiary to receive the proceeds directly. This allows the beneficiary to pay final expenses and evaluate where the remaining proceeds should be allocated. If the beneficiary already has a comfortable savings account balance, and has a long-term investment plan, than yes, investing is a better option for long-term growth than an interest bearing account. Albeit, taking on more risk.


Do you have any tips for someone that is really emotional and maybe not in the best mental space to make financial decisions? How long should they wait to make a decision? How can they do what’s “best” for their money while dealing with grief? 

There is always emotional grievance. That is why hiring a financial professional to guide you through this period is essential. Your advisor will make decisions that exclude the emotions. Part of the planning I do for clients is to run updated scenarios, with the top industry software, of their financial position including the proceeds. This removes the emotions of planning and allows the family to make the best decisions, taking into account multiple options with their proceeds. As a fiduciary, I always serve with my clients best interests, whether a death in the family has occurred or not. It is important to work with a financial advisor who operates under the fiduciary standard of care. 

Follow this link to read the entire article: https://meetfabric.com/blog/what-should-you-do-with-a-life-insurance-benefit

Click here if you would like to learn more about your options and if we can assist you with your wealth management, retirement, and insurance planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Coronavirus and Panic for Life Insurance

Life insurance and the panic for life insurance

The events of the last two months have brought plenty of craze to the insurance world, specifically life insurance. I am using this post to outline and provide clarity around life insurance planning during this time time of a virus outbreak.

People are looking for life insurance due to the coronavirus.
Should people panic and buy life insurance?

The best practice for whether to buy insurance depends on your individual needs. Despite coronavirus, you either need a policy to protect family, business, estate, etc., or you do not. The coronavirus certainly can cause you to think about your plan, as there is no cure at the moment, which draws concern to folks without a plan in place. However, the virus is no different from any other health scare or accident – cancer, heart attack, car crash – all these events will prompt you to rethink your plan and get coverage in place.

Follow this link to learn more about the different types of life insurance.

What should people know and look for that are interested in
buying a policy right away due to the pandemic?
 

Complete an application while you are healthy. If you wait and contract illness, the insurance companies will review your medical records and may have hesitation to approve your policy at the preferred rating. Worse yet, hospitalization or death could seriously impact your chances of an approved policy.

Are there any exclusions people should be aware of? 

If you are healthy and need coverage get it. Do not wait. The younger and healthier you are, the more favorable the cost. It is uncertain how the underwriters at the insurance companies will consider an illness, such as the coronavirus, when reviewing insurance applications. 

What could keep someone from being able to get a life
insurance immediately?
How long should they expect it to take
for the policy to start?

Insurance policies are largely based on your health and age. If you are old and have poor medical history, chances of getting a policy approved would be difficult. Previous medical history with life threatening illnesses, such as cancer, can also impact your ability to obtain coverage. Having bad habits, such as using tobacco, or a bad driving record, such as multiple DUI’s, also impact your ability to get an approved policy at the best rate. Policies can start at the time of application with what is referred to as “Temporary Life Insurance Coverage”. This coverage begins at the time of application, so the applicant has coverage while waiting for the full underwriting process to be complete. Applications can take a week to as long as a couple of months, depending on the applicant’s medical and lifestyle background. Also worth noting, if the applicant has recently traveled abroad to the virus hotspots, this too could cause a postponed application. Ultimately, the insurance companies are looking at the applicant and asking the question, how big of a risk is this person?

Click here if you would like to learn more about your life insurance options and planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Life Insurance – How to Make Sure You Have Enough

Life insurance - How to make sure you have enough

It is often recommended to get life insurance when you are younger, but what if you do not buy enough coverage early on and later become wealthier or have a bigger family than you imagined? What options should you consider and when should you start planning? 

If you need more life insurance coverage as your family grows, buying an additional policy is often the solution. Most people will have life events occur which prompt the need for more life insurance, such as a growing family. And there is no reason not to apply for another life insurance policy to make up for the coverage your family needs. I often find couples I work with who have small starter policies in place. After evaluating their needs, it is often determined they are under-insured, and they want more coverage. Term insurance is a great option for families looking for the lowest cost coverage that provides protection for a certain amount of years. If the couple is looking for a permanent life insurance plan, there are options such as universal life and whole life insurance products to explore. As for the timing of the life insurance purchase, the younger and healthier you are, the lower the premium because you are less of a health risk to the insurance company. That is why if you need the coverage, the best time is right now.

Why is group life insurance not necessarily the best way to go? What are the downsides with group life insurance? 

Group life insurance is a great benefit to have from an employer. However, group life insurance has a couple disadvantages, such as, amount and portability. In terms of amount, group life insurance coverage often equates to 1-2 times annual salary, and most people need much more coverage than that for their family and/or estate. If you leave your current job to go to a new company or start a new career, the coverage does not necessarily go with you. Group plans also have rising premium cost. Whether it is annually or every 5 years, the cost of insurance goes up and it is not always covered by the employer. I recently helped a couple lower their insurance cost by applying for individual policies because over the policy term, it would be cheaper to have an individual policy.

What approach should people take to avoid being under-insured when it comes to life insurance coverage? How often should they review and how should they determine an ideal amount of life insurance coverage?

The approach people should take to avoid being under-insured when it comes to life insurance coverage is to have their plan reviewed at least annually. Life events and changes happen over the years and if you stay on top of your coverage needs, you will always have adequate coverage. There is no ideal amount of life insurance, nor rule of thumb. Everyone has a different need and desire for coverage. Working with an experienced financial advisor or insurance professional who can provide a life coverage analysis is the best way to know if you have the right amount of coverage for your family and estate.

Click here if you would like to learn more about your options and if we can assist you with your life insurance planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Life insurance for a Stay-At-Home Parent

life insurance for a stay-at-home parent

Below is a video from Denver’s 9News channel discussing the need of life insurance for a stay-at-home parent.

Great interview on a topic that is often discussed with our clients.  I do agree there is a significant need to provide coverage on both parents, working and non-working.  Obviously, the family wants to insure the bread winner’s full human life value and income potential.  But what is the value of a parent that does not have a W-2 job, works on a contract basis, part-time, or not at all?  Just how much is a stay-at-home parent worth?  My wife and I both work, so we know the cost of full-time child care nowadays, and it’s not cheap.  Not to mention, all the other jobs around the house that would need to be taken care of if the stay-at-home parent unexpectedly passed away; laundry, dishes, making lunches, rides to/from school, helping kids with homework, making dinner, cleaning the house, transporting the family to after school activities, outside yard work, keeping the house in order, paying bills, mid-day doctor appointments, grocery shopping, and the list goes on.

I disagree with the estimated amount discussed in the conversation.  This amount will vary based on each family’s unique situation.  Maybe the amount is an average based on this advisor’s experience, but the exact amount is hard to provide with a blanket “rule of thumb” amount.  The advisor in the video does provide the correct advice for the consumer to discuss this topic with a professional.  These questions and more are discussed in the video below.  We are here to help you.  If you would like your current coverage reviewed or if you think it’s time as a stay-at-home parent to get life insurance coverage, give us a call today.

WATCH VIDEO BELOW

https://www.9news.com/video/money/heres-why-its-important-that-you-get-life-insurance/73-8118949

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Should I Buy Life Insurance?

should i buy life insurance erie co

I learned long ago there are 2 main reasons you should buy life insurance:

1) You love someone, or

2) You owe someone.  

Straightforward right, you love someone such as your wife, spouse, partner, kids, I even include charity organizations here if you want to leave a legacy.  The flip side, you owe someone.  Maybe you have debts that need to be paid and the responsible “you” doesn’t want to leave that mess to your family so you take a policy out to cover all your debts. 

We will look at a couple examples to put this into a real life perspective.  In our quick examples we have Person A and Person B.  Person A is married with 3 young kids, Person A is also the family breadwinner, and owns a home in the suburbs, but still carries the debt on house mortgage.  Person B is single, no dependents, no intention of having a family or dependents in the near future, rents a condo in a downtown neighborhood, and has no intention of leaving a legacy gift to any person or charity.

For Person A, there is a spouse and children dependent on their income, and lifestyle to support.  Life insurance is a simple solution in the event of Person A’s premature death.  Person B on the other hand, is not an ideal candidate to secure a life insurance policy at this time.  There are no dependents in the picture, no debts to pay, and no gifting intentions.  

With the different options and types of policies available in the marketplace you have many options to choose from that can be customized to your situation.  Life insurance is not a one size fits all program.  If that is what you have been told by a life insurance salesman I recommend you contact us and have a more in-depth conversation about your life insurance planning.  The policies today cover the most basic needs, to the most sophisticated situations, as well as, programs for business owners. If you don’t have a policy and think you are in the same boat as Person A, it’s time to get your life insurance coverage in order, schedule a meeting today or at least reviewed to make sure you have the coverage you want.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.