Life Insurance
Protect what matters most with the company who cares about you!
~The Gardner Group
What are my choices?
- Universal Life
- Whole Life
- Term
- Return of Premium Term (ROP)
~Universal Life is a permanent policy that you will not out live. These
policies accrue cash value and have flexible premium payments.
~Whole Life policies are perment and accrue the most cash value. Much like buying a house, these policies have cash value that can be borrowed.
~Term Life policies are temporary and these can be purchased for a period of 10 to 35 years. These policies are the lowest cost option, and are great for short-term needs such as a College fund protection.
~Return of Premium, ROP is a form of Term Life that accumulates cash value and at the end of the term you get your Premium returned to you or can purchase a reduced paid up policy.
How much do I need?
- Needs Analysis
- Income Replacement
- Social Security Shortfall
www.aigag.com/life/life.nsf/contents/learningcenter_lifeinscalculators
~A needs analysis approach is the most popular way of determining the amount of Life Insurance you need.
This model figures current expenses such as mortgages, cars, cost of living, etc. Also future expenses such
as college and retirement.
~Income Replacement refers to the amount of face value you will need to replace your yearly earned income. The idea is to live from the interest.
- ex. - Your gross yearly income is $50,000. Multiply by 20 to get $1,000,000, then multiply that by 5% APY to get $50,000 per year.
- If you expect to get 10% interest then you would multiply your yearly income by 10. ($50K * 10 = $500k * 10% = $50k/yr)
~Social Security Shortfall is the amount of money you will need to supplement your Social Security if your spouse were to passaway.
- Scenerio: If your spouse would passaway and you two had one child, SS will only pay the parent until the child reaches age 16 or until the parent reaches the age of 60 and will pay the child until they reach age 18. If a child attends college, they are likely going to be a dependent until around the age of 25. SS only pays until 16 and 18 so there is a 7 and 9 year gap. Here are some key expenses to consider: College will cost around $100-150k. Health insurance will cost on average $700 per month for a parent and child. Multiply that by 15 years of SS shortfall and that is around $105K.
These 3 methods will add up to roughly the same amount and this gives you a good indication of how much life insurance you will need.
To review your options and to decide which options are best for you, call (828) 322-1303