Far too often we work with people that know very little about the life insurance they own. While we understand life insurance isn't necessarily a fun topic to think about, it is extremely important you regularly do a life insurance self-check. Here are three questions that will get you started.
{AUDIO} How to Do a Life Insurance Self-Check
What type(s) of life insurance do you have?
There are two major types of life insurance: term and permanent. If you're unsure which type you have, look at your statement. If you see phrases like "cash-value", "whole life", "universal life" or "variable life" you have permanent life insurance. If you have term life insurance, it will simply state the word "term" followed by the length of the policy.
What type do we recommend? Term life insurance. The goal of life insurance is to mitigate risk in case of death. You don't need life insurance for your whole life. You only need it for a period of time until you become self-insured.
How much coverage do you have?
On your life insurance statement the of amount coverage you have will be clearly stated, likely near the top. Look for the phrase "death benefit" followed by a dollar amount.
How much coverage do we recommend? Dave Ramsey recommends 10x the annual income of the person. While we don't disagree with that assessment, the question that needs to get answered is "If you were to die, who would be affected and how would it affect them financially?"
What are you paying?
Typically, life insurance is paid yearly, quarterly or monthly. Where that money goes depends on the type of life insurance you have.
What do we recommend you pay for life insurance? As little as possible. Our goal is to get you the biggest death benefit while costing the least. This is yet another reason we recommend term life insurance. By far, it's the cheapest way to cover your family in case of death.
If you have any questions or concerns regarding your life insurance needs or policies, please call 320.222.4236 or email me directly at [email protected].