In this episode of Inside the Plan with the 401(k) Brothers, Bill Bush and Andy Bush, advisors at Horizon Financial Group, talk about why getting life insurance is an act of love. They share insight into what goes into a term life insurance policy, how to estimate what you need from a policy, and more.
Episode Highlights:
- Double check that your beneficiaries are correct on your plan, especially if you’ve gone through a life transition like a marriage or divorce.
- The primary beneficiary is the first in line and the contingent beneficiary is next in line.
- You can also split between your beneficiaries by percentage.
- Bill and Andy suggest term life insurance for a certain period of time where the premium and death benefits are consistent over that period.
- To figure out how much life insurance you need, look at your income as a starting point.
- A typical guideline is that it’s 12x your income, but that may not be enough; the factors that go into it change over the course of your life.
- Think about whether you have young children, if there are debts your spouse will need to eliminate, if higher education costs are a factor, and how much income your family will need to derive from this.
- Main factors in the cost of your premium are how old you are when you buy it, the term of the policy, what the death benefits are, and your health.
- It’s possible that eventually you’ll be able to accumulate enough wealth that you won’t even need life insurance.
- Life insurance could give you liquid assets if other assets are tied up in investments or tax policy.
3 Key Points:
- Make sure the beneficiaries on your life insurance policy are up to date.
- Consider all the factors that may impact how much of a death benefit your beneficiaries might need, including debt, lost income, children, etc.
- There are benefits to a life insurance policy beyond financially sustaining loved ones.
Tweetable Quotes:
- “Understand, if you’re buying it on your life, you’re not gonna be here if that thing gets enforced. So it’s really not for you, it’s for the ones you love.” –Bill and Andy
Resources Mentioned:
