Presented by: Hugh McGuire, hugh_mcguire@mcguire-retire.com
Shopping for life insurance is seldom high on most people’s “to do” lists. Still, when it comes to protecting themselves and their families, reliable statistics show that many two-income households in the United States do not have enough life insurance protection to be secure. What’s more, there is inadequate coverage on the non wage-earning partner in single-income households. So how do you determine how much – and what kind – of life insurance is right for you?
Step one is assessing your family’s needs. Before you can decide how much life insurance you need, you have to know precisely what needs you are hoping to meet. For example: What are your monthly expenses – housing, car payments, food, clothing, etc.? How long could you rely on savings to meet those expenses if the primary breadwinner wasn’t here? What kinds of expenses would you face if the non-wage earner were to die prematurely? Many stay-at-home partners provide “services” that are hard to put a price on – for example house cleaning, shopping, helping children with school work, etc. Finally, what about an emergency fund – do you have money set aside to meet emergencies or opportunities?
Step two is deciding how much life insurance you should buy. Questions to ask yourself include: Will you use your policy strictly for its death benefit or do you want to accumulate funds for college, retirement, or other expenses? If you use your policy to pay off debt, will you need additional funds to meet ongoing living expenses, and if so, for how long? Will you have other sources of income, for example, Social Security? How you answer these questions will help determine how much insurance you should buy.
Step three is determining how much life insurance you can afford to pay. Even if you need large amounts of coverage, it makes no sense to buy a policy you cannot afford. Once you know how much you can set aside – comfortably – each month, find a policy that fits your budget. Term insurance, for example, provides the largest amount of coverage for the lowest monthly cost, but it doesn’t build cash values and, eventually, the “term period” expires. Permanent insurance costs a little more, but you can borrow from its cash value to meet emergencies, supplement retirement income, or even pay for the premiums. Keep in mind, however, that policy loans will reduce the death benefit and cash value.
Once you’ve determined how much insurance is enough, how much you can afford, and what kind of policy to buy, find a reputable agent who represents a high quality company. While it may not be high on your “to do” list, your family – and your future financial security – could depend on it.
Presented by Hugh McGuire, President "McGuire Investment Group" 900 Haddon Ave. Suite 130, Collingswood NJ 08108. Hugh has almost 30 years in the financial services business, resides in Collingswood NJ with his two sons. Mark and Hugh Jr.
www.mcguire-retire.com
