Protecting Income
Life Insurance & Income Replacement
Life insurance is the only solution that guarantees funds to replace income for families in the event of a death. Of course, there may be other sources of funds that can be deployed to replace income. Planners must take into account all of the sources available and consider the impact of using the funds to the long-term family goals. For example, if a surviving spouse taps into retirement funds to replace current income, there may be significant tax implications, not to mention the reduction or elimination of a retirement income source. We find that most advisors benefit from a process to determine the proper amount of insurance a client needs to replace income. It is not acceptable to use a rule of thumb such as five or ten times income. Rules of thumb do not take into account the time value of money or inflation.
Our Income Replacement Process
First Determine The Amount of Income To Be Replaced
Choose An Inflation Rate
Choose A Rate of Return The Life Insurance Proceeds Could Earn
Choose How Many Years Income Will Be Desired
Calculate The Present Value of A Replacement Fund
The following calculation will determine the amount of insurance needed to replace income annually based on the listed factors in our replacment income process.
This income replacement number does not take into consideration other insurance needs. The section below discusses other items that clients typically add to their total needs.
Common Needs For Life Insurance
Final Expenses
The amount needed to cover all final expenses upon death. This includes funeral costs, medical expenses, probate fees, etc. The national median cost of a funeral is over $7,360.
Emergency Funds
The amount they would like to reserve for unforeseen financial needs, such as income lost due to work absence, medical expenses, and home/auto repairs.
Mortgage Debt
Would their family want to keep their current home or possibly move to a smaller, more manageable home or rental property?
Education Funds
The total cost of sending their children to college. The current annual average cost of public and private colleges including room and board is approximately $20,770 and $46,950, respectively
Other Debt
Estimate the amount needed to pay off debts. Include credit card balances, car loans, education loans, and other outstanding liabilities.
Income Replacement
Think of life insurance in terms of the income it can provide. After all, your client’s goal is to ensure that their paycheck continues for those who are dependent on that income
Disability Income Protection
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Chance of Disability
One of the most overlooked insurance products is disability income. People are far more likely to be sidelined by an income reducing injury or illness than suffering from premature death. The Social Security Administration studies death and disability. In the latest administration report, the chance of becoming disabled is 25% versus a 12.7% chance of dying before the normal retirement age.
Disability insurance is not ultimately about disability; it is about protecting a person’s or family’s financial future in the event of a disabling accident or sickness. The vast majority of Americans do not have enough savings to pay their expenses during even a short-term emergency. Many could not tap into their retirement funds because they are very limited. Even those who have retirement savings, do not want to jeopardize their golden years.
We are focused on delivering full-spectrum solutions to our customers. This often means something different for each situation. Whether we’re working with an individual case or multi-life cases, all of our clients benefit from our years of proven experience and success in this ever-changing field. From the latest technology to progressive sales concepts, we offer unbiased, cost-effective solutions to help your clients obtain the disability coverage that meets their objectives
Disability Income Policies
High School, College, & Professional Athlete Disability Policies
Disability Overhead Expense Coverage
High Limit Lump Sum Disability
Disability Contract Completion
