It happens to all of us. This is true whether you are on your way to accomplish tasks at work or at home. I’d venture to say we’ve all gotten to the end of the day thinking, “What happened? I didn’t accomplish anything on my list.”
Unfortunately, this phenomenon can negatively affect your family’s finances as well as your productivity at work or at home.
Life insurance is a great example. Discussions and plans regarding this sensitive topic can easily be sidelined due to its perceived complexity or general discomfort around the topic. With that in mind, here’s an easy-to-implement four-step process for dealing with life insurance for your family.
1. Determine the right amount of coverage
Begin with the end in mind. Literally. Figuring out what you will need based on your unique situation should something happen to you or your significant other is a key step in your family’s life insurance decision. Yes, it is likely that this would have major financial implications for your family either he died of you. Things like paying off debt, covering final expenses, raising children and sending them to college, replacing lost income, and giving you or your spouse time to get back on their feet if something happens to the other can add up to a significant price. .
There are online calculators to help you figure out what you need. VA has one. There is an easy-to-use calculator at lifehappens.org. And, of course, an insurance agent could help you find the answer.
2. Analyze what you have.
Now that you know what you need, it’s time to compare it to what you have. First, for those in uniform, you probably have $400,000 in Service Members Group Life Insurance (SGLI), military group life insurance. Spouses can have up to $100,000 of Family SGLI coverage. Non-military employers usually provide group coverage as well. In or out of the military, you can see how a job change could affect your life insurance. This is one reason why it may make sense to diversify your sources of life insurance coverage.
And this is where things can get complicated. You must choose the type of coverage. What is the right type of insurance? There are generally two broad types of coverage, term or permanent.
Temporary needs—those that disappear, like mortgages and raising children—are well covered by term insurance. For example, if you have a couple of kids aged 3 and 5, you could buy a 20-year policy (this type of policy has premium and death coverage over a 20-year period) that would provide coverage until the kids are out on their own — knock on wood.
On the other hand, for a policy you want to have “forever,” a perpetual policy may make sense. For example, it could be an amount of money you want your spouse or family to have while you’re gone, or life insurance that’s part of comprehensive estate plans or a special needs situation.
Now that you’ve determined what you need and thoroughly examined what you have, it’s time to…
3. Fill in the blanks
If you’ve crunched the numbers and there are no gaps—either in amount or source—your work is done for now. On the other hand, if you need additional coverage, it’s time to shop around.
Here are a few things to keep in mind: First, high coverage needs do not necessarily mean high premium payments. Life insurance can be surprisingly cheap. Second, as I mentioned earlier, match the type of coverage you are purchasing with the reason for the coverage. Finally, it is getting easier and more convenient to buy life insurance. Digital applications, automated underwriting, and technology and data are making it easier and faster to get life insurance. Don’t let fear of the process sidetrack you.
4. Rinse, wash and repeat
The ability to set and forget a strategy or process is nice. Unfortunately, life insurance is not suitable for this type of approach. A new baby, new home, divorce, or job change are examples of common life events that can change your life insurance situation. Keep this in mind, and when these things happen, remember to review your life insurance with these simple steps.
Get the coverage your family needs
FSGLI, TSGLI, VGLI, SGLI … a long list of acronyms and the bare minimum may not be enough to cover your family’s needs. Explore life insurance options with our free tool that compares rates and matches you with the coverage you need.
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