Showing posts with label Life Insurance. Show all posts
Showing posts with label Life Insurance. Show all posts

Thursday, February 16, 2017

Life Insurance Before Age 40


Millennials have good reasons to obtain coverage now.

Provided by Benjamin Bogetto



Do you plan to buy life insurance before you turn 40? Maybe you should. You may save money in the long run by doing so.

At first thought, the idea of purchasing a life insurance policy in your thirties may seem silly. After all, young adults are now marrying and starting families later in life than past generations did, and you and your peers are likely in excellent health with a good chance of living past 80.

In fact, LIMRA – a life insurance research and advocacy group – recently surveyed millennials and found that 30% thought saving for a vacation mattered more than buying life insurance coverage. The perception seems to be that insurance is something to purchase when you start a family or when you hit your forties or fifties.1
  
Getting a policy before you marry or start a family may be a great idea. The reasons for doing so might be compelling.
  
Your premiums will be lower. The older you become, the more expensive life insurance becomes. Data compiled last summer by Life Happens, a non-profit life insurance education effort, confirms this.

Life Happens asked several prominent U.S. insurers to supply their preferred premium rates for healthy non-smokers aged 25, 35, 45, and 55 buying a $250,000 whole life policy (the kind designed to build cash value with time). The average preferred premium rates for 25-, 35-, and 45-year-olds fitting this description were:

25-year-old male: annual premium of $1,987
35-year-old male: annual premium of $2,964
45-year-old male: annual premium of $4,747

25-year-old female: annual premium of $1,745
35-year-old female: annual premium of $2,531
45-year-old female: annual premium of $3,947
  
The numbers starkly express the truth – whole life insurance premiums more than double between age 25 and age 45.2
  
Premiums on term life policies are even lower. Term life insurance is essentially coverage that you “rent” for 10, 20, or 30 years – it cannot build any cash value, but in some cases, a term policy can be adapted or exchanged for a whole life policy when the term of coverage ends.
   
If you are young, term coverage is remarkably cheap. NerdWallet recently researched term life premiums for healthy 30-year-olds. It found the following sample rates for 20- and 30-year term policies valued at $250,000:

30-year-old male: annual premium of $156 for a 20-year term policy, $240 for a 30-year term policy
30-year-old female: annual premium of $141 for a 20-year term policy, $206 for a 30-year term policy

The downside of term coverage is that you are “renting” the insurance. Just as you cannot build home equity by renting a house, you cannot build cash value by “renting” a policy.3 

A whole life policy may become quite valuable. As Life Happens notes, the average such policy bought at 25, 35, or 45 may have a guaranteed cash value of anywhere from $100,000-200,000 when the policyholder turns 65, assuming the policy is kept in force and no loans are taken from it. Universal life policies permit tax-deferred growth of the cash value.1,2

Make no mistake, a whole life policy is a lifelong commitment. It must be funded every year or it will lapse. That should not scare you away from the value and utility of these policies – the cash inside the policy can often be borrowed or withdrawn. Sometimes families use cash value to fund college educations or help with medical expenses or retirement. Such withdrawals can lessen the death benefit of the policy, but what is left is often adequate. Cash withdrawals from a whole life policy are usually exempt from taxes, just like the death benefit.1    
    
Maybe this is the time to put time on your side. Age-wise, life insurance will never be cheaper than it is for you today. Getting coverage now – even if you are single – may be a money-smart move as well as a great life decision. 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities offered through First Heartland Capital, Inc. Member FINRA/SIPC
Bogetto Financial is not affiliated with First Heartland Capital, Inc.  

Bogetto & Associates does not provide legal or tax advice.  These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.

Citations.
1 - cnbc.com/2016/10/17/think-about-life-insurance-sooner-rather-than-later.html [10/17/16]
2 - lifehappens.org/product-selector/comparing-the-cost-permanent-and-term-life-insurance/ [1/26/17]
3 - nerdwallet.com/life-insurance#basic [1/26/17]

Financial Health...For Now & Tomorrow



Contact us Today

Telephone - 314-858-1602

10805 Sunset Office Drive, Ste. 202
St Louis, MO 63127

Follow Us

at No comments:
Labels: , , ,
Location: St. Louis, MO 63127, USA

Friday, September 23, 2016

Life Insurance … Is It Time?

Have you been putting it off?

Provided by Benjamin Bogetto

According to the insurance industry group LIMRA and the nonprofit Life Happens, 43% of Americans have no life insurance.1




Why don’t more young adults buy life insurance? Shopping for life insurance may seem confusing, boring, or unnecessary. Yet when you have kids, get married, buy a house or live a lifestyle funded by significant salaries, the need arises.

Finding the right policy may be simpler than you think. There are two basic types of life insurance: term and cash value. Cash value (or “permanent”) life insurance policies offer death benefits and some of the characteristics of an investment – a percentage of the money you spend to fund the policy goes into a savings program. Cash value policies have correspondingly higher premiums than term policies, which give you death benefits only. At first glance, despite these higher premiums, cash value policies may appear to provide a significant advantage over term policies based on the added investment benefits, alone—but, careful analysis reveals that these benefits only begin to tip in the investor’s favor after 10 to 20 years of monetary contributions. Term may be a good choice for young adults because it is relatively inexpensive. But there is an economic downside to term life coverage: if you outlive the term of the policy, you and/or your loved ones get nothing back. Term life policies can be renewed (though many are not) and some can be converted to permanent coverage.2

The key question is: how long do you plan to keep the policy? If you don’t want to pay premiums on an insurance policy for more than 10 years, then term life stands out as the most attractive option. If you are just looking for a short-term hedge against calamity, that’s the whole reason behind term life insurance. If you’re getting into estate planning, then permanent life insurance may prove a better choice.


Confer, compare and contrast. Talk with a financial or insurance professional you trust before plunking down money for a policy. That professional can perform a term-versus-permanent analysis for you and help you weigh per-policy variables.

 
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.


Securities offered through First Heartland Capital, Inc. Member FINRA/SIPC
Bogetto Financial is not affiliated with First Heartland Capital, Inc.  

Bogetto & Associates does not provide legal or tax advice.  These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.


Citations.

1 – nerdwallet.com/blog/insurance/who-needs-life-insurance/ [1/29/16]
2 – fool.com/insurancecenter/life/life05.htm [8/2/16]

Financial Health...For Now & Tomorrow



Contact us Today

Telephone - 314-858-1602

10805 Sunset Office Drive, Ste. 202
St Louis, MO 63127

Follow Us

at No comments:
Labels: , , ,
Location: St. Louis, MO 63127, USA

Thursday, May 26, 2016

5 things to avoid when establishing a life insurance policy

Life insurance is a necessary step in your financial planning to ensure that your loved ones and family will be taken care of in the event of your death.  You can make mistakes that can cause possible issues for your family.  Our experienced St Louis financial planning team at Bogetto & Associates can help you navigate putting together the right life insurance policy for your situation and help you avoid these 5 mistakes:



1) Only naming a primary beneficiary, or not being specific enough


Most often, the spouse is named as the primary beneficiary.  You need to remember that you may be involved in a situation where you and your spouse both lose your lives.   If you have children, then you should consider including them on the policy as well.  Be specific when naming your children as policy beneficiaries...include their full names, social security numbers, and if you have a percentage of the policy going to each child.  If you do not name a beneficiary, then the benefit will typically go into your estate, leading to possible probate issues.

2) Naming a minor child as a beneficiary


Life insurance companies will not pay proceeds of the policy directly to a minor child.  Create a trust to avoid this issue and name the trust as the beneficiary of the policy.  You can also name a reliable adult as the beneficiary, or name an adult custodian for the life insurance proceeds.  If you don't take this into account, the court can appoint a guardian to handle the proceeds until the child reaches 18 or 21 depending upon the state.  This can be a costly process.



3) Not thinking about possible probate


Many people rely on a written will to express their wishes and pass their assets to their family and others.  Probate however, does not allow the policy proceeds to pass directly to the people that you want to receive it.  The will must go through probate and this can be a lengthy (and expensive) process.  By establishing a trust, you can possibly avoid these issues and get the proceeds to your family quicker.

4) Taxes, taxes, taxes


Many times, life insurance death benefits are generally tax-free.  An exception is if the policy holder is the owner of the policy, but another is the named insured.  You can name a beneficiary of the policy, but this is considered a taxable gift.  

For example, mom may be the policy owner on the life of dad for the benefit of their children. In this situation, mom is effectively creating a gift of the insurance proceeds to her children/beneficiaries. As the donor, mom may be subject to gift tax. Consult financial professionals like the team at Bogetto & Associates for advice on the best way to structure the policy. Bogetto & Associates does not provide legal or tax advice. These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.


5) Disqualifying a beneficiary from Government Benefits


A less common mistake that people can make is to disqualify their beneficiary from government benefits they may be receiving for disabilities or other circumstances.  Government benefits are often tied to the financial circumstances of the individual and receiving proceeds from a life insurance policy may disqualify them from needed help.  In addition, there is a possibility that some proceeds may have to be reimbursed to the government for benefits paid.  Again, consulting a financial professional and an estate attorney can help you clarify any issues that may exist with your life insurance policy.

Bogetto & Associates can help!

Let our St Louis financial advisers help you with your life insurance needs.  We can help you setup the right policy, and help you avoid any beneficiary mistakes.  We will listen to your questions and provide you with any advice you need.  Life insurance is very important for your piece of mind and your family's financial future...let Bogetto & Associates help!

Sources:

http://www.insure.com/life-insurance/naming-life-insurance-beneficiaries.html 

http://www.protective.com/learning-center/life-insurance/life-insurance-basics/five-beneficiary-mistakes-people-can-make-on-their-life-insuranc-policy-and-retirement-plans/ 




Financial Health...For Now & Tomorrow



Contact us Today

Telephone - 314-858-1602

10805 Sunset Office Drive, Ste. 202
St Louis, MO 63127

Follow Us



Securities offered through First Heartland Capital, Inc. Member FINRA/SIPC
Bogetto Financial is not affiliated with First Heartland Capital, Inc.  

Bogetto & Associates does not provide legal or tax advice.  These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.

at No comments:
Labels: , , , , ,
Location: St. Louis, MO 63127, USA
Subscribe to: Posts (Atom)