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Life Insurance Awareness Month


September is National Life Insurance Awareness Month. Woohoo, am I right?  Since protection planning is one of the six key areas of a solid financial plan, September is a great time to assess your life insurance needs and make changes as necessary. Let’s get started!

When you begin to think about your insurance needs, ask yourself the following questions:

1. If you died, what immediate financial expenses would your family need to pay? This could be related to debts, funeral expenses, daily expenses, or college planning.

2. How long would your dependent family members need support if you were no longer here?

3. Do you have any specific situations you would want to fund, such as charity, education planning, or inheritance?

4. What percentage of your salary is devoted to current expenses and future needs?

5. What policy/policies do you currently have?

Now that you’ve reflected on these fundamental questions, you can begin to choose the right policy for you. There are two basic types of life insurance options: term life and permanent (cash value) life insurance.

Term life insurance, often offered by employers, provides life insurance for a specific period of time (generally, 1 to 30 years). If you die during the term, your beneficiary received the life insurance. If you outlive the term, the policy terminates.

Cash value life insurance offers protection for your entire life as long as you pay the premium to keep the policy in place. As you pay your premiums, a portion of those payments are placed in the cash value account. To your benefit, the cash value grows tax deferred. You are able to borrow against the cash value; however that will decrease the death benefit. Also, you can cancel the policy and receive the remaining cash value.

Prior to purchasing or changing your policies, make sure to look at costs, savings, and keep in mind your insurance needs will evolve with your life. Family, job changes, health and financial needs will all impact the type of insurance that’s appropriate for you. Every person and family has their own financial planning needs and this will affect what is the right choice for you.

What questions have you asked yourself to bring clarity to your insurance needs? Do you anticipate making any changes to your protection needs this month? 

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