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FAQ for Life Insurance

Q. Why should I own Life insurance now?

1. To establish your financial well-being
During the immediate future you will establish your financial habits and these money habits will determine your financial well-being for life. At school a student realizes how fatal it is to leave studies until the last day. It's the same with your financial plans - if you start early you're in a much  better position to make the grade financially.  

2. To establish the basis of your future collateral
As a young person, there will be many times ahead when you will need collateral - when you buy a car, when you buy a home, when you get married, when you have a family, when you need money to open your own business. Your life insurance planning helps contribute to financial independence throughout your lifetime.

3. To guarantee your future insurability
It is very unlikely that you will become uninsurable at this time. However, just on the off-chance that it could happen, you want to be sure your plan is flexible enough to leave the door to more insurance open in the future, whether or not you remain insurable.

4. To keep down the cost of your insurance
It's strictly a matter of business - the earlier you start on your Financial Program, the less your premiums and the greater your return.

5. To establish a source of financial advice
It is important to anyone starting on a Financial Program to have someone to turn to for advice as you grow in your career. Derring income taxes through retirement plans and special estate planning advice are just two examples of financial needs that may arise in the future.

Q. How much life insurance is enough?

Let's take a look at how $500,000 of life insurance could be used and distributed at death:

$20,000 cash for immediate expenses. Any amount not required would be kept as an emergency fund for sickness, etc.

$100,000 cash to pay off the mortgage so that the family could continue to live in their own world.

$40,000 as an educational fund to provide some of the money needed if the children are to get a higher education.

$40,000 as an emergency fund for home repairs, major car repairs and the many other unexpected expenses that can ruin the best planned budget.

$24,000 per year for the day to day expenses to living, i.e. food, clothing, taxes, etc.

* The above income figure is based on a net after tax return of 8%

Calculating your life insurance needs in 3 easy steps... it's easy as ABC.

Determining  how much life insurance you need doesn't have to be complicated. Working with your insurance advisor, use the following 3 easy steps to find out how much insurance protection you require today to protect your loved ones.

            Step A : Identify your current debts and financial needs
            Step B : Determine your future financial needs
            Step C : Deduct the portion to be recovered by your assets and financial resources

                                    A + B - C = Your Life Insurance Needs.

Please download the PDF on how to calculate your Life Insurance

Q. Are life insurance payouts taxable?

No, life insurance payouts are paid directly to the named beneficiary and are tax free. The payment does not pass through the estate if there is a named beneficiary, so creditors do not have access to that money to settle the estate.

Q. Which type of life insurance should I be getting, Term, Permanent or Universal Life?

Well, there is no clear cut answer to this question. All three types are good types of coverage and each type will satisfy a certain need. After careful analysis of the situation at hand and the needs of the individuals, I will be able to recommend one type over another for the situation. There are times when two types can be used in the same situation if the needs call for that strategy.

Q. What is mortgage Life Insurance?

This is the insurance that is offered by your bank or lending institution that will pay off your mortgage in the event of your death. Most lending institutions offer mortgage life insurance as part of their mortgage packaging. Be sure to look carefully before you sign on the dotted line. You could find yourself locked into insurance that does more to protect your lender than you. This type of life insurance should be purchased directly with a life insurance company.


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