Thursday, June 17, 2010

Life Insurance Isn't Really That Scary

Most people don’t really want to talk about life insurance. Words like death and mortality, and the costs associated with funerals and final expenses aren’t topics anyone likes to talk about. While it’s definitely not an issue at the top of anyone’s list, there are some steps you can take that can make the process a little less overwhelming.

First, get the scoop from a qualified source. Think of that first meeting as more of an educational experience than an “answer everything” session. I like to ease into things with a little fact finding process, painless to you, called the DIME process, (Debt, Income, Mortality, and Education) or if you prefer the official phrase, Life Insurance Needs Estimator. I know, it sounds daunting, but really it’s just a matter of sitting down with your advisor and answering a few questions. And don’t worry, the questions are easy…they’re all about you after all.

After you ace this quick Q&A, your advisor will have the tools to start working towards a more customized plan for you, one that includes all those unique, individual circumstances.

For example, while making sure that funeral and final expenses will be paid for is important to older Americans, younger families need to also plan out how they will pay for their children’s education, especially while the parents are in their earning years. Your insurance agent should answer those important questions like protecting income and providing future education for all family members. Here’s a good starting point: Be sure to provide 2 years of annual salary for loved ones to readjust after the passing of a family member.

Next, your life insurance and financial advisor will help you with those finer details such as taking mortgages, credit card debt, and student loans into consideration. Consulting with your estate planning attorney or tax advisor will round out the remaining points of a sound financial plan.

Oh, and keep in mind that at your death, your investments do not pass through probate. Probate is a legal process that takes place after someone dies. Probate usually involves a lot of paperwork and court appearances and includes proving in court that the person's will is valid, identifying and inventorying the deceased person's property, property appraisal, paying debts and taxes, and distributing the remaining property according to the will. Only life insurance products provide a tax free distribution of death benefits.

I hope you found this helpful in taking those first steps towards securing your future. For all of your life insurance needs, contact Newsad Insurance Services.

- Tom Newsad

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