GREEN BAY (WLUK) — If you pass away, would your loved ones be financially covered? In 41% of households, the answer may be “no.” September is Life Insurance Awareness Month and financial professional Kevin Klug of Secure Retirement Solutions joined Rachel Manek on Good Day Wisconsin to offer advice on being better prepared.
RACHEL:: WHO NEEDS LIFE INSURANCE?
• I recommend anyone with dependents, including a spouse and/or children consider getting life insurance.
• It may help to take care of your family.
• I recommend my clients who are in or near retirement consider keeping their life insurance policies because the benefits are tax-free to their heirs.
• If you are not married, don’t have a lot of debt and don’t have children, you may not need life insurance.
RACHEL: WHAT ARE THE DIFFERENT TYPES OF LIFE INSURANCE?
Term Life Insurance
• Term policies are less expensive.
• They cover you for a specific number of years, usually ten or 20. If you pass away during that time, a set amount is paid out to beneficiaries.
• Some people choose term policies to last until they reach retirement, or until their children hit a certain age.
Permanent Life Insurance
• Permanent policies cover you for life and are typically more expensive.
• Unlike term policies, permanent policies have an investment component: a portion of the premium is invested and grows tax-free.
RACHEL: WHAT ELSE DO WE NEED TO CONSIDER WHEN PURCHASING LIFE INSURANCE?
• The longer you wait, the more expensive life insurance plans can become. As you get older, you’re more likely to get ill, which can cause insurance prices to skyrocket.
• Additionally, you might be leaving your family unprotected until you purchase a life insurance plan.
• How much coverage do you need?
• Look at your current salary. A life insurance plan should guarantee you 10 to 15 times what you earn annually.
• However, according to Nationwide, the average American household that has insurance only has enough to cover 3 1/2 years of income.
• Take a look at a life insurance calculator on my website at srsplans.com to help determine how much coverage you actually need.
• Years may go by after getting a life insurance policy and some of your financial needs may have been met, go back and look into your life insurance policy to see if you can pay less.
• You will also want to make sure your beneficiaries are up to date.
• It is important to re-evaluate your situation every 2-3 years or with every major life event (weddings, divorces, births and deaths), so your family will be taken care of.