Written by: Jacob Bobick, CSA

Do You Need Life Insurance?

September is Life Insurance Awareness Month!

It’s probably not marked on your calendars – because it doesn’t sound all that exciting – but it’s a good reminder of the importance of covering ourselves and our families.

Most industry estimates suggest that half of Americans don’t have enough life insurance, and that’s a scary proposition.

I know, I know – it’s easy to say “I’m young, I’m healthy, I’m in great shape”; but not having adequate coverage could have severe consequences on the well-being and future of our loved ones.

Protect the Ones Who Matter Most

We all know that it’s expensive to live in New Jersey.  With the cost of food, shelter, taxes, clothing, college, etc., sometimes it seems like more is going out than coming in.

Insurance is never an “exciting” purchase; it obviously can’t compare with a new car, a pool, or even a new pair of shoes.  Insurance, however, is a relieving purchase.

When set up correctly, our insurances protect us if the worst happens – so at least we’re prepared for it.

Just as we have insurance to protect our homes, our cars, our businesses, our health, and our toys, it’s important to consider the impact of a lost income due to an untimely death.

Back to those expenses for a second… heaven forbid, if part of the household income is lost due to the passing of a family member, life insurance can ensure those bills are paid and the family stays afloat.

Life insurance replaces the lost income.  Life insurance keeps a terrible situation from becoming even worse.

Easier Than it Used to Be

With the timing of the global pandemic, I’ve gotten more questions than ever about life insurance.  It makes sense, as people are more “aware” of the number of lives being lost, so they consider their own mortality.

Believe it or not, the life insurance companies have made it easier for most of us to get coverage.

Because of distancing guidelines, many carriers are doing “non-med” underwriting, which means the applicant might not require an in-person exam to get approved.

For those candidates in good to excellent health, we can get policies issued in a week or two, which is comforting in these uncertain times.  If you’ve had some health challenges, we can still get you covered as well- it just might take a little longer.

The bottom line, as in all insurance planning, is to make sure you are fully covered before something happens!

Two Cups of Coffee

People ask us all the time “how much does it cost?”, which is a difficult question to answer.

Every situation is different, so we have to quote it specifically to the needs of the individual, but the fact of the matter is it’s relatively inexpensive to at least have some coverage.

For example, a healthy 40-year-old man could get a $250,000 policy for less than $12/month.  A 40-year-old female could get it for even less.

At those rates, it’s hard to justify “I can’t afford it”- that’s basically two cups of designer coffee to cover the cost.  We can get you some specific quotes to meet your needs in just a few minutes, so just call us – that is what we are here for!

It is Not Just for Families

While “personal” life insurance might be the most common, life insurance for business planning is equally important.

When there are multiple owners of a business, traditionally there is a “buy-sell agreement” in place.  Essentially, this agreement dictates what happens when one of the partners leaves the business or passes away.

Because an untimely death is often sudden, unlike a retirement, this could cause a strain on the surviving owner(s) to buy out the deceased’s share of the business.

Life insurance is one of the most common ways (and the cheapest) to protect the ownership for the survivor and the family of the deceased.

Example: Matt and Max each own 50% of a business valued at $1,000,000.  They each take out a $500,000 life insurance policy listing each other as beneficiaries.  If Matt passes away, the proceeds of the policy are paid to Max, who uses those funds to buy out Matt’s heirs.  Max now has 100% ownership of the business, and did not have to mortgage a home or the business to make it happen.

Nursing Home Costs

Long-term care planning has become a hot topic over the past few decades.

Understandably, most families don’t want to see their hard-earned money lost to a nursing home or assisted living facility, so long-term care insurance policies have grown increasingly popular as a planning tool- designed to offset the costs of care and shelter you from dipping into your savings.

Many of these policies are built on a life insurance platform to retain as much value and flexibility as possible, giving your family options (and protecting your assets) should extended care services become necessary.

Clever Alternatives

Aside from the “traditional” products mentioned above, companies are creating some “clever” ways to help families amass wealth.

Because of some of the tax advantages of life insurance, we can use it in products designed for retirement to create an income stream when you stop working (while keeping a death benefit intact in case you pass away).

Alternatively, we’ve set up “survivorship” policies, also known as “second-to-die” policies, which are a fantastic way to pass on money to your heirs.

Policies like these give some comfort to retirees who sometimes are afraid to spend their money, knowing they want to leave as much possible behind to their children and grandchildren.

We use a small percentage of their “total assets” to fund the policy, and Mr. and Mrs. Smith can utilize the remainder of their money, without fear of spending down the inheritance.

When they pass away, the lump sum is left to their beneficiaries, tax-free!  In the right situation, it’s a perfect wealth-building tool that allows a family to enjoy their retirement.

Necessary Decision

We can all agree that there is not much excitement in a conversation about life insurance.  But we can probably also agree that it’s a necessary component in a family’s financial plan, however informal that plan may be.

We’ve got the experience to guide you to the right coverage, and the insurance companies have made the entire process more streamlined, so really – there’s no excuse to not get this taken care of.  Your family [literally] depends on it!

Jacob Bobick is our newest associate at G. S. Newborn & Associates, Inc.  Jake has over twenty years of experience helping clients with life insurance, business perpetuation planning, and retirement planning.  Jake is a member of the Society of Certified Senior Advisors.

Contact Jake at jake@newborninsurance.com for more information