| Life Quote |
Buying life insurance is a critically important decision for most of us.
The average family or business is under insured and most people spend more
time planning their vacation than they do planning for the unthinkable.
For this reason we congratulate you for taking the first step to make sure
those left behind are taken care of.
Life insurance should be adequate, suitable, and affordable.
Sometimes these requirements conflict with each other. For this reason we
developed the Three Principles of Life Insurance to help guide your decision.
The Three Principles of Life Insurance
1. The Premiums Must Be Affordable
We often tell our clients, "One of the most important calls we can receive is from a
beneficiary saying that they need to make a death claim." We know that
sounds strange but the reason death claims are important to our business is
because we know the life insurance policy did what it was intended to do. While
someone's death is a terrible thing, the only thing worse is the financial
devastation that can result from that death.
That is why the first principle of life insurance is that the only good coverage
is coverage you can afford. If you buy a policy with more coverage than you
can afford and then let the policy cancel several years from now because you
can't pay the premium, what is the point? Not only will the coverage not be in
force when it is needed but it will be more expensive to re-purchase the policy,
even if you can qualify at an older age.
We will make sure that your coverage is within your range of affordability.
We are independent brokers with access to hundreds of insurance carriers so
finding affordable insurance coverage is usually not a problem.
2. Always Have at Least Some Life Insurance
The second principle of life insurance is that something is better than nothing.
We have never had a beneficiary refuse a $40,000 death benefit because the
insured wanted but couldn't afford $100,000 in coverage. Any amount helps!
Since tomorrow isn't guaranteed, buy at least some coverage now since today you
know you can. Hopefully you can buy more coverage later when your finances
allow you to, but it is better to at least get some coverage now even if the
ideal coverage you want is not affordable.
3. The Purpose of Life Insurance is Not to Cover All Losses
The final principle of life insurance is that the main purpose is not to cover all
losses. Ideally life insurance would cover everything, but the main purpose of life insurance is financial
disaster avoidance.
For example, let's say you own a home with a loan of $200,000 and a value
of $300,000. If you are buying life insurance for the purpose of mortgage
protection; it is "ideal" that the amount of coverage would pay off the
home loan, $200,000. However, the main purpose of mortgage protection is to
protect the equity in your home so that it goes to your family instead of your
bank. In other words, if your mortgage payment is $1,500 per month then $36,000
in coverage would allow your beneficiaries to pay for the mortgage for two years.
By having this small amount of coverage your beneficiaries will have time to sell
the home and capture $100,000 in equity.
As you can see, it is not always critical to have the ideal amount of coverage
especially if the ideal amount of coverage is not affordable.
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